On Feb. 7, 2023, U.S. President Joe Biden delivered a State of the Union address and claimed, "In the last two years, my administration cut the deficit by more than $1.7 trillion – the largest deficit reduction in American history."
Biden's remark was later countered by Republican House Speaker Kevin McCarthy, who tweeted, "Fact Check: Biden has INCREASED the deficit by $800 billion."
These claims were specifically about the U.S. government's budget deficit, not the debt.
First, we'll explain the difference between these two terms. We'll also look to provide the facts and figures relevant to this subject. Basically, our goal is to avoid channeling the sleepy nature of Ben Stein's economics teacher character from "Ferris Bueller's Day Off," so please bear with us.
Deficit vs. Debt
The difference between the deficit and the debt can be explained in a simple way.
Each year, the government decides on a federal budget plan. If the government spends over its budget, the result is a deficit for that year. In the unlikely event that it spends less than planned in the budget, the result is a surplus. Each year's deficit or surplus either adds or subtracts from the national debt.
The last time the government had a surplus was in 2001, according to data from the U.S. Treasury Department.
Biden's Claim of $1.7 Trillion Decrease
On the Treasury Department's website, the "U.S. Deficit by Year" chart provided helpful data relevant to the claims made by Biden and McCarthy.
For the federal budget in the year 2020, the chart showed a deficit of $3.13 trillion. In 2021, the figure was $2.77 trillion. In 2022, the number was much smaller, at $1.38 trillion.
Note: Keep in mind that the fiscal year for the new federal budget begins each year on Oct. 1. Biden took office in January 2021.
Again, Biden claimed his administration "cut the deficit by more than $1.7 trillion." This figure appeared to come from comparing figures for 2020 ($3.13 trillion) and 2022 ($1.38 trillion). The difference between those two numbers is $1.75 trillion.
So, why did the deficit fall from $3.13 trillion when former U.S. President Donald Trump was in office in 2020 to $1.38 trillion under Biden in 2022?
According to the nonpartisan Committee for a Responsible Federal Budget, the drop in the deficit can be credited to "shrinking or expiring COVID relief." The data also projected that some of the economic changes that helped reduce the deficit in 2022 "will actually increase future deficits by over $1.5 trillion between 2023 and 2032."
The Biden administration and Republicans have both commented on the matter in the past, according to past reporting from The Associated Press (AP):
The annual deficit roughly halved in size because of the end of spending tied to coronavirus pandemic relief and higher tax revenues as more Americans found jobs — an improvement that 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.
McCarthy's Claim of $800 Billion Increase
As for McCarthy's claim, he said that the Biden administration increased the deficit by $800 billion. That figure appeared to come from comparing a projection from 2021 to the reality of what actually ended up happening. We'll explain.
According to reporting from FactCheck.org, in February 2021, right after Biden took office, the nonpartisan Congressional Budget Office (CBO) announced a projection that the deficits for each fiscal year of 2021 and 2022 would total $3.31 trillion. These were the predictions made ahead of time by the CBO.
However, two years later, we now know that the total deficit amount for those two years ended up being $4.15 trillion, factoring in $2.77 trillion for 2021 and $1.38 trillion for 2022.
The actual deficit total for 2021 and 2022 of $4.15 trillion minus the earlier CBO projection of $3.31 trillion equals $840 billion. This may have been where McCarthy got his figure of $800 billion, which meant that he was commenting on Biden's shortfall in meeting the CBO projection.
Here are other rumors related to the 2023 State of the Union:
- Did McCarthy 'Shush' Marjorie Taylor Greene Multiple Times During 2023 SOTU?
- Did Someone Wear 'Kamala Harris Mask' to Pose as Her at 2023 SOTU Speech?