Biden takes credit for deficit reduction as costly, bipartisan COVID relief programs expire

President Joe Biden is taking credit for reducing the budget deficit by $1.7 trillion after most of the priciest COVID-19 stimulus spending programs that Congress passed have expired.

"We've reduced the deficit," Biden said at a rally in Maryland on Thursday evening. "The Inflation Reduction Act lowers the deficit by $300 billion over the next 10 years, and that’s on top of the $350 billion I reduced the deficit last year and the $1.5 trillion dollars reducing it this year." 

The stimulus spending that Congress approved throughout the pandemic took the deficit and national debt to historic levels.

Since the start of FY2019, the national debt has risen sharply from $21.6 trillion to $30.7 trillion, according to Treasury Department figures. 

Both Democrats and Republicans voted to pass the first two COVID pandemic stimulus packages — the $2 trillion CARES Act and an additional $900 billion bill — under a Republican-led Senate and Democrat-led House during former President Trump's tenure in office.

Under Biden, the Democratic-led Congress passed the third stimulus package — the $2 trillion American Rescue Plan — along a party-line vote using budget reconciliation to avoid the filibuster.

"Legislation has increased the agency's estimates of the federal budget deficit, excluding the costs of servicing the debt, by $0.5 trillion in 2022 and by $0.2 trillion in 2023, mostly by increasing federal spending," read a recent Congressional Budget Office analysis. "The effects of legislative changes on the deficit will be considerably smaller in 2022 and 2023 than in 2020 ($2.3 trillion) and 2021 ($2.6 trillion) because several provisions of pandemic-related legislation will expire or wind down."

The CBO reported that under current law, the budget deficit in 2022 is projected to be $1 trillion, which is $1.7 trillion "less than the shortfall recorded last year, as spending in response to the pandemic wanes and revenues increase."

The deficit in 2019, before the COVID pandemic hit, was $984 billion, which was "equal to 4.6% of gross domestic product," according to the CBO. The deficit grew to a historic $3.1 trillion in FY2020 as a result of COVID-19 stimulus spending. It was $2.8 trillion in FY2021. 

Under Biden, the Democrat-led Congress has passed a $2 trillion bipartisan infrastructure bill that will increase deficits by roughly $400 billion and a CHIPS bill that will raise deficits about $80 billion, according to the CBO.

Congress also passed the PACT Act to expand health coverage for veterans exposed to burn pits, which the Committee for a Responsible Federal Budget projected will raise the deficit by at least $277 billion. 

Biden signed the $740 billion Inflation Reduction Act, which federal budget experts have projected will reduce the deficit between $174 billion and $300 billion over 10 years due to the tax increases in the bill and additional tax collection with $80 billion in new IRS funding.

After signing the bill, Biden unilaterally implemented a student debt forgiveness program that budget watchdogs estimate will ultimately increase the national debt by up to $600 billion.

The CRFB pointed out that the debt forgiveness plan wipes away any deficit reduction that results from the Inflation Reduction Act. Despite this, Biden claimed the debt forgiveness plan is going to be paid for.

"Thanks to our historic deficit reduction, we can afford to cancel $10,000 in student debt and $20,000 if you're on a Pell Grant for tens of millions of Americans making under $125,000," he said on Thursday.