Arguments of Budget Hawks in Congress Buoyed by Report of $2 Trillion Federal Spending Shortfall
The figure amounts to a doubling of the difference between what the government spends each year and the amount it receives in taxes.
Republicans in Congress threatening to shut down the federal government unless deep spending cuts are imposed have another arrow in their quiver after the Congressional Budget Office projected that the budget deficit will reach nearly $2 trillion in the current fiscal year.
The figure amounts to a doubling of the difference between what the government spends each year and the amount it receives in taxes. To support the deficit obligations, the government is now borrowing money at more than twice the interest rate it was paying only a year or two ago and is on track to pay almost as much servicing its debt each year as it spends on national defense.
In its monthly budget review for August, the CBO said the federal deficit amounted to $1.6 trillion during the first 11 months of the fiscal year that ends September 30. The figure is $600 billion more than the deficit posted during the same period last year, when many of the Covid pandemic-related spending programs were still active.
The CBO says the deficit would be even higher were it not for the Supreme Court’s decision blocking President Biden’s plan to cancel hundreds of billions of dollars in student loan debt.
The president of the nonpartisan Committee for a Responsible Federal Budget, Maya MacGuineas, said the data about ballooning deficits are “doubly disturbing” given that they come at a time of economic expansion. With unemployment low and the economy improving, the deficits should be shrinking, not rising, she said.
“Eleven months in, and we have already borrowed $1.5 trillion this fiscal year, compared to $946 billion at the same point last year,” Ms. MacGuineas said. “On top of that dismal fiscal news, we still haven’t funded the government past the end of the month — Washington appears to be sticking to its time-honored tradition of governing poorly, and by perpetual crises.”
In recent months, the Biden administration has repeatedly boasted that the president reduced the budget deficit during his first two years in office. In a speech to Philadelphia unions on Labor Day, Mr. Biden credited his “Bidenomics” economic plan for the lower deficits. “And even with what we’ve done — unlike the last president — in my first two years, all this stuff — guess what? I cut the deficit $1.7 trillion,” Mr. Biden said.
Those claims, though, have been described as misleading by budget hawks in Congress, conservative think tanks, and even the normally pro-Biden Washington Post. To make his claim, they say, Mr. Biden is comparing the $3.1 trillion deficit during fiscal 2020, when the government was spending trillions of dollars to offset the effects of the Covid pandemic, with the $1.3 trillion deficit during fiscal 2021.
In fact, the CBO had expected the deficit to plunge between 2020 and 2021, but it instead dropped less than expected because of Mr. Biden’s green energy subsidies and other spending programs. The White House told Republican senators in a letter released Tuesday that it has also spent some $100 billion on the war in Ukraine since February 2022.
The House returned from its August recess Tuesday to more talk of a potential government shutdown over the issue of runaway spending. Conservatives in Speaker McCarthy’s GOP caucus have threatened to hold up a measure to keep the government funded past September 30 unless deep cuts in spending and additional border security measures are part of the package.
In a statement Tuesday, the White House termed the budget cuts being proposed by Republican lawmakers “draconian” and called on Mr. McCarthy to abide by a deal reached earlier this year that avoided a default on the national debt.
“Speaker McCarthy and House Republicans are ignoring the bipartisan budget agreement they passed and instead advancing extreme, partisan appropriations bills that break their public promise and gut key investments in the American people,” the statement said.