WASHINGTON: The US government on Friday reported that its fiscal 2022 budget deficit plunged by half from a year earlier to $1.375 trillion, due to fading Covid-19 relief spending and record revenues fueled by a hot economy, but student loan forgiveness costs limited the reduction.
The US Treasury said the $1.400 trillion reduction in the deficit was still the largest-ever single-year improvement in the US fiscal position as receipts hit a record $4.896 trillion, up $850 billion, or 21 per cent from fiscal 2021.
President Joe Biden touted the deficit reductions in remarks at the White House and at Delaware State University, and said the deficit would shrink by another $250 billion over the next decade, given Medicare’s ability to negotiate lower drug prices.
Biden chided Republicans for voting against the deficit reduction. While his administration lowered the deficit, it has boosted spending on infrastructure and expanded benefits for middle- and low-income Americans.
“You know, we’ve gone from an historically strong economic recovery to a steady and stable growth, while reducing the deficit,” Biden said.
Outlays for fiscal 2022, which ended on September 30, fell by a record $550 billion, or 8 per cent from last year to $6.272 trillion. But the outlays for September, the fiscal year’s final month, included the recognition of $430 billion in costs from the Biden administration’s plan to forgive student debt of up to $20,000 for former college students now earning under $125,000 a year and under $250,000 for married couples.
The move brought the September budget deficit to $430 billion, six times the prior-year September deficit of $65 billion. — Reuters
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