The U.S. budget deficit was sliced in half for fiscal 2022, the biggest drop in history following two years of huge Covid-related spending.
Though still large in historical terms, the budget shortfall declined to $1.375 trillion, compared to the 2021 deficit of $2.776 trillion.
The decline would have been steeper had it not been for the Biden administration’s student loan forgiveness program. Education spending totaled $639.4 billion for the fiscal year, $408 billion higher than estimated.
The 2022 fiscal year saw $4.896 trillion in revenue against $6.272 trillion in outlays. The outlays number represented about a $550 billion decline in spending but an $850 billion increase in revenue. The revenue total is by far the highest ever for the U.S. government.
Deficits in the previous two years soared as Congress shelled out massive sums to combat the pandemic.
The shortfall hit a record $3.13 trillion in 2020 due to more than $5 trillion in CARES Act spending and other outlays. In 2019, the deficit was $983.6 billion. Prior to 2020, the highest deficit ever was $1.41 trillion in 2009 as the financial crisis came to a close. The U.S. briefly ran a surplus from 1998 to 2001.
In fiscal 2021, legislators passed the American Rescue Plan, a $1.9 trillion spending package that the White House said helped get the nation through a severe health and economic crisis, but which critics say was unnecessary and helped fuel the highest inflation rate in more than 40 years.
President Joe Biden, however, placed the deficit blame on Republicans for approving the 2017 tax cut bill.
“The federal deficit went up every single year in the Trump administration — every single year he was president,” he said. “It went up before the pandemic. It went up during the pandemic. It went up every single year on his watch, Republican’s watch.”
Biden called the GOP fiscal approach “mega-MAGA trickle down” that he defined as “the kind of policies that have failed the country before and it’ll fail it again.”
Treasury Secretary Janet Yellen said the budget statement released Friday “provides further evidence of our historic economic recovery, driven by our vaccination effort and the American Rescue Plan.”
Yellen added that the results also showed Biden’s “commitment to strengthening our nation’s fiscal health.”
Earlier this year, the White House pushed through the Inflation Reduction Act aimed at a variety of areas including reducing medical costs, boosting clean energy and reforming the tax code. However, inflation has continued to climb, and administration officials have stressed that the Federal Reserve’s primary role in fighting price increases is through interest rate hikes.
—CNBC’s Emma Kinery contributed reporting.