Comment on this storyComment
“As a matter of fact, my first two years in office I’ve lowered the deficit by a record $1.7 trillion. Lowered the deficit — the debt.”
— President Biden, remarks at the North America’s Building Trades Unions (NABTU) Legislative Conference, April 25
After releasing a video on Tuesday announcing that he was running for reelection, the president addressed union leaders and bragged about his record on deficit reduction. It’s an important talking point for him as he faces off against House Republicans who are demanding steep reductions in government spending in exchange for a vote to raise the nation’s debt limit. Without a deal, the United States in theory would not be able to pay its bills for past spending.
But, as we have documented before, Biden’s talking point is highly misleading — worthy of Three Pinocchios.
Yet he keeps saying it over and over. By our count, at least 30 times since June he’s taken credit for reducing the budget deficit by $1.7 trillion.
Why is this significant? Readers may recall that during Donald Trump’s presidency, we established a new category, the Bottomless Pinocchio, to account for false or misleading statements repeated so often that they became a form of propaganda. A statement would get added to the list if it had earned a Three or Four Pinocchios rating and been repeated at least 20 times. By the end of the Trump presidency, 56 claims made by Trump had qualified.
We’d previously given Biden a Bottomless Pinocchio for claiming — without any evidence — that he’s traveled 17,000 miles with Chinese president Xi Jinping. He’s still saying that line, mostly recently during a speech to the Irish parliament on April 13.
The best way to determine a president’s impact on budget deficits is to look at what was predicted before he arrived — and then what happened after his policies were enacted.
Biden gets his $1.7 trillion figure by comparing the deficit in fiscal year 2020 ($3.132 trillion) with the deficit in fiscal year 2022 ($1.375 trillion). Federal fiscal years end in September, so some of fiscal 2021 overlaps with Trump’s term. (Biden claims a “record,” but that’s in raw dollars; the deficit fell even more after the end of World War II.)
Here’s the rub: The Congressional Budget Office, the official scorekeeper, in February 2021 already estimated the budget deficit would fall dramatically in fiscal 2021 and 2022 because emergency pandemic spending would lapse. The combined 2021 and 2022 budget deficits were projected by the CBO in 2021 to be $3.31 trillion. In November, the CBO said the combined deficits were in fact $4.15 trillion.
What happened? Biden enacted additional pandemic relief funds and other new policies, resulting in a more modest decline in the deficit. For instance, the deficit was projected to be about $1 trillion in 2022, and it turned out to be about $1.375 trillion. It was supposed to decline $875 billion in 2021, and it was actually $360 billion under Biden.
All told, in those two years Biden increased the national debt about $850 billion more than originally projected.
Of course, budget projections are not written in stone, especially in the long term. Technical factors, such as inflation increasing tax revenue, can change the underlying mix of spending and revenue. When we first examined this claim in September, a White House official emphasized to The Fact Checker that outlays (spending) fell by about $950 billion from 2021 to 2022 but revenue also increased by about $800 billion. The official asserted that deficit share of gross domestic product (GDP), the broadest measure of the economy, was projected to decline compared with CBO’s February 2021 projection. The argument was that Biden’s policies led to a better fiscal outcome.
But Marc Goldwein, senior vice president at the nonpartisan Committee for a Responsible Federal Budget (CRFB), calculated that deficits would have been about 3.3 or 3.4 percent of GDP — compared with 4.6 percent as estimated by CBO — if everything were the same as in the February 2021 projection. The big difference was the impact of inflation, according to the CBO — and an unexpected $80 billion windfall in 2021 for the government in the sale of telecommunications licenses.
When the 2022 fiscal year ended at the end of September, the deficit turned out to be 5.5 percent of GDP in 2022, even higher than the CBO projection at the start of 2021.
In other words, again the data shows the deficit picture has worsened under Biden.
Moreover, going forward, Biden has enacted legislation that will require the federal government to borrow even more, such as the bipartisan infrastructure bill ($370 billion in additional deficits over 10 years), health and disability benefits for veterans exposed to toxic substances ($280 billion), the CHIPS Act for semiconductor manufacturing expansion in the United States ($80 billion) and student loan debt relief and repayment pauses ($750 billion).
One major bill passed under Biden, the energy and health bill dubbed the Inflation Reduction Act, was designed to reduce the deficit, and Biden has emphasized that.
The IRA “is going to bring down hundreds of billions more in decades ahead — bring the — the cost down,” Biden told union leaders. (CBO projected it would result in about $240 billion in deficit reduction over 10 years. But the law would shrink deficits by only about $90 billion if a three-year extension of expanded health-care subsidies were made permanent, CRFB estimated.)
In his battle with congressional Republicans, who claim they are concerned about rising deficits, through sleight of hand, the president repeatedly has claimed he achieved historic deficit reduction because of his policies. Budget numbers often make people’s eyes glaze over and so, from a communications perspective, it’s easy to manipulate the math. But the numbers don’t lie. The president earns his second Bottomless Pinocchio.
Send us facts to check by filling out this form
Sign up for The Fact Checker weekly newsletter
The Fact Checker is a verified signatory to the International Fact-Checking Network code of principles
Source link: https://www.washingtonpost.com/politics/2023/04/28/bidens-misleading-deficit-claim-earns-him-bottomless-pinocchio/