US budget deficit halved but remains far from pre-pandemic levels as Covid spending falls

CNN business

The US budget deficit was halved in fiscal year 2022, a record $1.4 The trillion drop was driven by massive pandemic-related spending cuts and a jump in federal government revenue as jobs and wages rose in the economic recovery.

The latest figures released by the Treasury Department on Friday show the annual budget shortfall fell to $1.38. billion in the fiscal year ended September 30, The deficit has been reduced for the second consecutive year. In 2021, the deficit reached $2.78 trillion, a historically high figure. Before the Covid-19 pandemic, the deficit was 980,000 billion dollars in the 2019 fiscal year.

The final numbers would have been even lower if not for the student loan forgiveness program — President Joe Biden’s executive order to cancel up to $10,000 in student loans below a certain income threshold and up to $20,000 for Pell Grant recipients. Department of Finance The program, which has drawn sharp criticism from Republicans for its cost and scale, has a $430 billion impact on the deficit in September, making it the fourth-largest budget shortfall on record.

Biden will expand on the program, which officially launched this week, during remarks at Delaware State University on Friday. White House officials have acknowledged the full cost, but argue that the benefits to borrowers and the broader economy far outweigh the risks, especially as deficit numbers are expected to fall as they have done.

The president announced the record decline in the deficit on Friday morning, saying, “We are moving from a historically strong economic recovery to stable, steady growth as we reduce the deficit.”

Expenses exceeded $6.27 billion, a $550 billion decrease from last year’s fiscal year. Revenue rose more than $850 million to just under $4.9 billion.

But the Committee on a Responsible Budget said Friday that the latest budget is “a stark reminder of how precarious our fiscal situation is.”

“It should come as no surprise that the Federal Reserve is having a hard time controlling inflation when fiscal policy continues to make its job even more difficult with more borrowing,” said Maya MacGuineas, Chair of the Committee on a Responsible Fiscal Budget. .