President’s Budget Rightly Reduces Deficits, But Not Nearly Enough
President Biden just released his Fiscal Year (FY) 2023 budget, which lays out some of his tax and spending agenda over the next decade, along with a deficit-neutral placeholder to enact some parts of the Build Back Better agenda. The remainder of the budget would reduce deficits by roughly $1 trillion over a decade, on net. Incorporating this deficit reduction, under the budget’s own estimates, deficits would total $14.4 trillion over the next decade and debt would continue to grow as a share of the economy, from 102.4 percent of Gross Domestic Product (GDP) at the end of FY 2022 to a record 106.7 percent of GDP by 2031.
Our preliminary analysis of the budget is available here, and a full analysis will be published on our website later in the day. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
President Biden deserves credit for presenting a budget that calls for paying for his new initiatives while reducing the deficit below current law levels. With near-record debt levels, surging inflation, and low unemployment, now is the right time to pivot towards deficit reduction – we are encouraged the President is taking this seriously. While the budget still borrows too much, and the debt would grow too high, after many years of both necessary and reckless borrowing, a greater emphasis on deficit reduction would be a welcome change.
Unfortunately, this budget leaves debt on an unsustainable path, and lacks important details on how it would structure the core of its agenda or address provisions scheduled to expire. Even taking the budget at its word, debt would rise to a new record by the end of the decade. The budget does not go far enough toward putting the nation’s fiscal house back in order, nor does it tackle the tougher tradeoffs necessary to responsibly prevent Social Security, Medicare, and Highway Trust Fund insolvency.
The $1 trillion of net deficit reduction called for under this budget should be a floor, not a ceiling, for how much savings should be enacted this year. Substantially more deficit reduction will need to be put in place over time, and sooner rather than later. We hope that Congress and the President work together to produce such legislation, which could help to tackle near-term inflation and support sustainable long-term growth.
It’s time to reverse course and put the debt on a downward sustainable path by paying for new priorities, reducing wasteful spending, lowering health care costs, restoring trust fund solvency, and increasing revenue.
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