The U.S. national budget deficit effectively doubled from 2022 to 2023 when President Joe Biden’s failed student debt forgiveness plan is properly accounted for, according to The New York Times.
The country’s budget deficit was reported on Friday to be $1.7 trillion for fiscal year (FY) 2023, compared to around $1.375 trillion in FY 2022, according to a Treasury Department press release. Despite the report by the Treasury, the deficit numbers are closer to $2 trillion for this year and closer to $1 trillion for the last due to an “accounting mirage” related to Biden’s student loan forgiveness plan, according to the NYT.
The “accounting mirage” occurred when the student loan forgiveness plan was tallied into the budget for FY 2022, adding an additional $400 billion to the total, according to the NYT. Because the plan never took effect, the over-calculation from the last year was subtracted from FY 2023, which tended to understate the growth in deficit by inflating FY 2022 and deflating FY 2023.
“Earlier this year, President Biden signed into law over $1 trillion in bipartisan deficit reduction,” Janet Yellen, Treasury secretary, said in the press release. “And looking forward, the President has put forward a budget that reduces the deficit by another $2.5 trillion over the decade by asking the wealthiest Americans and big corporations to pay a fair share, while supporting our historic investments in America’s long-term economic strength.”
The Treasury asserts that a drop in revenues in 2023 compared to 2022 was the reason for the increased deficit, with revenues falling to 16.5% of Gross Domestic Product (GDP), according to the press release. The Department also claims that non-interest spending did not meaningfully contribute to the increase as a percentage of GDP.
The Supreme Court struck down the Biden administration’s plan to grant student loan forgiveness to nearly 40 million Americans in June after the president attempted to effect his plan using executive power, bypassing Congress. The plan would have canceled up to $10,000 in student loan debt for non-Pell grant recipients and up to $20,000 for Pell grant recipients.
The national debt has risen substantially in that same time, reaching over $33 trillion for the first time in U.S. history, according to the NYT. Many fiscal watchdogs warn that the cost of paying interest on the nation’s debt could become its largest expenditure if trends continue over the next three decades.
The president has pursued a number of high-spending policies during his tenure, making them a signature part of his economic plan, “Bidenomics.” Biden passed the American Rescue Plan in March 2021 and the Inflation Reduction Act in August 2022, authorizing $1.9 trillion and $750 billion, respectively, in new spending.
The Treasury did not immediately respond to a request to comment from the Daily Caller News Foundation.
Will Kessler on October 21, 2023