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.
Yes, liars they are, and unfortunately we are all forced into the same hand basket headed to hades due to the over spending.
No need to go there. We can’t control what others do, but we can adjust our own spending and saving to compensate.
Some of us can, anyway.
According to the CBO:
“… According to CBO’s projections, the President’s proposals would have the following major effects: Federal deficits over the 2023–2032 period would total $13.1 trillion. Measured in relation to the size of the economy, deficits would average 4.2 percent of gross domestic product (GDP) over that period. …”
Penn Wharton Model link:
“deficits would average 4.2 percent of gross domestic product (GDP) over that period.”
Is this the new 4% rule?
Give me a break.
This is the same person/organization who embraced the “Inflation Reduction” Act –
saying: “… it is a major victory. It is a model for how we can get multiple things done responsibly without punting on the payfors. …”
According to Penn Wharton’s Econometric Model, the “Inflation Reduction” Act will INCREASE the deficit by $4 Billion in 2023, 27.3B in 2024, 23.6B in 2025, and 6.5B in 2026. The projected reduction in annual deficits is 100% concentrated in the later years of the 10 year budget window (2027 – 2031).
What’s the likelihood that any of those revenue raisers will still be law in 5 years – or that any of the revenue raising provisions will achieve the projected amounts? I’d say, based on decades of past experience, next to nothing.
Just as important, both before and after the “Inflation Reduction” Act estimates are incorporated, projected annual federal deficits will be $1+ Trilloin for every year in the 10 year budget window.
Consider also that the Penn Wharton model also also projects that all of the spending and taxing won’t reduce inflation, and may, in fact INCREASE inflation.