President Biden’s pledge to cut the deficit by more than $1 trillion by the end of the year has budget pundits and tax hawks scratching their heads, especially as the White House pushes trillions in new spending.
Republicans say that if Mr. Biden really wanted to cut the deficit, he wouldn’t ask Congress to reinvigorate the administration’s $1.75 trillion social welfare and climate change agenda.
“Want to reduce the deficit,” said Senator Marsha Blackburn, Republican of Tennessee. “Spend less and reduce the size of the federal government.
In his first State of the Union address, Mr. Biden attempted a delicate balancing act by pledging to cut the deficit while urging lawmakers to pass trillions in new federal spending.
“By the end of this year, the deficit will be reduced to less than half of what it was before I took office,” he said. “I’m the only president to cut the deficit by more than a trillion dollars in a single year.”
Shortly after touting the pledge, Mr Biden pivoted to defend his long-stalled welfare agenda, once known as the Build Back Better Act but now dubbed Build Back America.
“When we invest in our workers, when we build the economy from the bottom up and middle together,” Biden said. “We can do something we haven’t done in a long time: build a better America.
The Congressional Budget Office estimates the legislation, which includes $500 billion in new climate change spending and billions for social protection initiatives like universal preschool, will push the deficit to between $367 billion and $3,000. billions of dollars over the next decade.
The White House defends its desire to relaunch Build Back Better, arguing that it will help reduce the deficit and fight inflation.
“My plan to fight inflation will reduce your costs and reduce the deficit,” Biden said. “Seventeen Nobel laureates in economics say my plan will ease long-term inflationary pressures.”
Tax hawks aren’t buying the claims, though. They say Mr. Biden backs a typical tax-and-spend political agenda and is just lip service to those worried about runaway deficits.
“Even liberal economists like Larry Summers in the Obama White House have warned that Biden’s spending spree will trigger inflation,” said Sen. Mike Braun, a Republican from Indiana. “We are lucky that so much of this reckless economic program has failed.”
Mr. Biden’s rhetoric about the deficit is also being undermined by pressure from the White House for billions in new spending on coronavirus testing and military and humanitarian aid to Ukraine. While some of these moves enjoy bipartisan support, they do little to bolster Mr. Biden’s credibility as a deficit and spending hawk.
Budget experts add that Mr Biden’s claims that he has already cut the deficit by a trillion are also misleading. They note that the White House is using 2020 as its benchmark – a year in which federal spending skyrocketed due to the coronavirus pandemic.
“Congress has passed an unprecedented amount of economic stimulus spending in 2020 and 2021,” said David Ditch, federal budget analyst at the Heritage Foundation. “The vast majority of this spending does not occur in the current fiscal year…and as such the deficit is tactically smaller.”
In March 2020, Congress passed a coronavirus relief package totaling more than $2 trillion in hopes of averting a recession. Later that year, they passed another $900 billion stimulus bill.
About a year later, a month into Mr. Biden’s tenure in the White House, Congress passed a third coronavirus relief bill, totaling more than $1.9 trillion.
Overall, the new spending has significantly widened the federal deficit. Early in Mr. Biden’s presidency, the deficit hit an all-time high of $3.3 trillion, roughly double the figure seen during the Great Recession of the late 2000s. By comparison, the deficit was only $984 billion.
The deficit narrowed slightly to $2.7 trillion, the second-highest total on record, at the end of 2021 as government spending fell as the coronavirus receded.
Experts further note that soaring inflation, coupled with a post-COVID 19 economic resurgence, is driving the deficit down. Federal revenues jumped about 28% in the current fiscal quarters.
Rising revenues have helped narrow the budget deficit slightly, though the nonpartisan Congressional Budget Office estimates the country will still run a deficit of more than $1 trillion over the next 10 years.
“If a ham sandwich was sitting in the Oval Office, it would have presided over more than $1 trillion in deficit reduction during that time,” Ditch said.
Some also note that the current deficit would have fallen even further had Mr. Biden not championed legislation like the $1.2 trillion bipartisan infrastructure package. This bill is expected to add $256 billion to the deficit over the next decade, despite claims that it has been paid for entirely by supporters.
“I fully support infrastructure spending,” said Sen. Rick Scott, Republican of Florida. “But we can’t afford this reckless spending.”