The U.S. Treasury Department released the final Monthly Treasury Statement for Fiscal Year 2022 today, confirming the deficit totaled nearly $1.4 trillion in FY 2022. The effects of COVID relief ending explain the entirety of the decline in the deficit between 2021 and 2022.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
We borrowed $1.4 TRILLION last year. That is not an accomplishment – it’s a reminder of how precarious our fiscal situation remains.
The entirety of the decline in the deficit between 2021 and 2022 can be attributed to the expiration of temporary COVID relief, not due to a renewed era of fiscal responsibility. In fact, the deficit would have been almost $400 billion lower had the Biden Administration not decided to enact an inflationary, costly, and regressive student debt cancellation plan in August.
Despite claims of ‘historic deficit reduction,’ lawmakers and the President have approved nearly $5 trillion of new borrowing over the last two years. It should be no surprise that the Federal Reserve is having a hard time getting inflation under control when fiscal policymakers keep making their job even harder with more borrowing.
As we enter the new fiscal year and finish out the calendar year, policymakers need to reverse course. With inflation surging and interest rates rising, we need deficit reduction.
Lawmakers should – at the very least – pledge not to add any more debt through the new year. They should at least be able to go two and a half months without adding more to the debt.