Biden: the U.S. budget deficit has been cut in half

The U.S. federal budget deficit halved in the fiscal year that ended Sept. 30. The deficit narrowed to $1.38 trillion because of the economic recovery from the COVID-19 pandemic and cuts in welfare spending, the White House said Friday.

COVID-19-related spending, such as unemployment benefits and other public assistance programs, declined after U.S. companies returned to normal operations, contributing to the recovery of the world’s largest economy.

President Joe Biden welcomed the significant reduction in the federal deficit, calling today’s report evidence of a resurgent economy.

In a televised address from the White House, Biden, hailing “the largest ever reduction in the federal deficit,” called it “further evidence that we are rebuilding the economy.”

The budget deficit reduction was “the largest such reduction in a year,” the Treasury Department and the White House Budget Office said Friday.

More growth in personal and corporate tax revenues, bolstered by job growth, contributed, with tax revenues for fiscal year 2022, which ended Sept. 30, up by a record $850 billion from 2021.

“Today’s joint budget report is further evidence of our economy’s historic recovery,” Treasury Secretary Janet Yellen said, highlighting the critical role of the American Bailout Plan, the big economic stimulus package passed by Congress at the instigation of the Joe Biden administration last year.

According to the report, federal spending was cut by $550 billion to $6.27 trillion, in part reflecting cuts related to the COVID-19 pandemic.

According to the Treasury Department, borrowing by the federal government rose by $2 trillion to $24.3 trillion, still the size of the world’s largest economy.

The Treasury Department said skyrocketing inflation, which drove up borrowing costs, resulted in $36.6 billion more in interest payments on federal debt than expected.

The report said individuals paid $2.6 trillion in taxes and corporations paid $425 billion in taxes. The Department of Health and Human Services spent $1.6 trillion last fiscal year, the Defense Department spent $727 billion, and foreign aid reached $24.6 billion.