Dems, GOP both find use in latest deficit numbers

Reaction illustrates opposing views on fiscal responsibility

This fiscal year’s budget deficit shrunk in half from last year, but the red ink soared on a monthly basis in September largely because of President Joe Biden’s plans to forgive student debt, as three decades’ worth of costs were compressed into a single month.

The budget figures released Friday by the Treasury Department reveal dueling visions about what it means to be financially responsible: Biden can rightly claim that the budget deficit for fiscal 2022 plunged $1.4 trillion from the prior year; critics can use the same report to say that forgiving education loans pushed up the federal debt by roughly $400 billion as the government booked the full expense.

Buried in the numbers is a deeper battle between Democrats and Republicans about what it means to be good financial stewards. The federal budget deficit totaled $1.38 trillion this year. That’s down from $2.78 trillion in fiscal 2021 — and it’s a message that Biden wants to sell to voters going into November’s midterm elections.

“Today we have further proof that we’re rebuilding the economy in a responsible way,” Biden said in remarks at the White House. “Republicans in Congress are doubling down on a commitment to explode the deficit again.”

The annual deficit roughly halved in size because of the end of spending tied to pandemic relief and higher tax revenues as more Americans found jobs — an improvement Biden credits to his policies.

Republicans counter that Biden’s $1.9 trillion coronavirus relief plan that helped fuel those job gains also helped to trigger high inflation, a key concern of voters going into the midterms. They also want to reverse his recent 15% minimum tax on corporations and expanded funding for the IRS, even though both could reduce predicted deficits.

The government will likely need to raise its legal capacity to borrow and House GOP Republican leader Kevin McCarthy has signaled that he would push for spending cuts if the GOP gains a majority.

“You can’t just continue down the path to keep spending and adding to the debt,” the lawmaker from California said in an interview this week with Punchbowl News. “There comes a point in time where, OK, we’ll provide you more money, but you got to change your current behavior.”

Biden interpreted those comments as a threat to hold U.S. government funding hostage and possibly make it impossible to repay debt.

“They will crash the economy next year by threatening the full faith and credit of the United States, for the first time in our history putting the United States in default unless we yield to their demand to cut Social Security, Medicare,” Biden said.

Federal finances improved over the past 12 months as the unemployment rate dropped to

3.5% from 4.7% in September 2021.

The job gains enabled tax revenues to jump

21% from a year ago, while overall spending fell 8% as the government’s coronavirus-related aid has faded.