Rep. Alexandria Ocasio-Cortez (D-NY) claimed that the tax cuts passed under former President Donald Trump have been the “largest contributor” to federal budget deficits over the past few years rather than the spending agenda enacted by President Joe Biden.
Treasury Secretary Janet Yellen recently informed House Speaker Kevin McCarthy (R-CA) and other lawmakers in a letter that the debt ceiling, an arbitrary cap on the national debt established by Congress, exceeded the statutory limit of nearly $31.4 trillion, starting a debate on the future of federal deficit spending. Ocasio-Cortez was pressed by a journalist on Thursday to discuss whether she believes her own party is culpable for recent record deficits.
“Democrats have been in charge for the past two years; do you think Democrats have spent too much money?” the reporter asked. “I think the largest contributor to the debt ceiling, to our deficit, has been the Trump tax cuts,” the lawmaker responded.
The Tax Cuts and Jobs Act, which constitutes the most significant legislative accomplishment of the Trump administration, is projected to decrease federal revenues by $1.9 trillion between 2018 and 2028, according to an analysis from the Congressional Budget Office. On the other hand, spending packages approved by Biden will contribute more than $4.8 trillion in new deficit spending between 2021 and 2031, according to an analysis from the Committee for a Responsible Federal Budget, exceeding the $1.9 trillion added by the Tax Cuts and Jobs Act. Removing the effect of the American Rescue Plan implies $2.5 trillion of new deficits.
Trump presided over federal budget deficits ranging between $665 billion and $984 billion ahead of the lockdown-induced recession, during which the deficit rose to $3.1 trillion in fiscal year 2020 as a result of stimulus measures such as the CARES Act, according to data from the Office of Management and Budget. Biden oversaw a $2.8 trillion deficit in fiscal year 2021, largely due to the passage of his American Rescue Plan. Though the commander-in-chief has repeatedly asserted that he has successfully reduced the budget deficit, the shortfall of $1.4 trillion in fiscal year 2022 significantly exceeds the deficits witnessed before the recession.
Ocasio-Cortez has previously received criticism for proposing ambitious legislation that would require significant federal expenditures. The first iteration of her Green New Deal would have cost between $51 trillion and $93 trillion over the course of a single decade.
More broadly, however, both Republican and Democratic administrations have maintained unsustainable budget deficits and inflated the national debt to more than $31.5 trillion. The most recent breach of the debt ceiling comes after Republican lawmakers struck a deal with McCarthy under which the party’s new majority vowed to introduce a budget that refrains from increasing the statutory debt limit.
A recent analysis from economists at the University of Pennsylvania’s Wharton School revealed that a 30% decrease in spending or a 40% increase in taxation would be necessary to handle current deficit spending and future obligations. A similar study from the Committee for a Responsible Federal Budget found that policymakers must enact 26% across-the-board spending cuts in order to balance the budget within the next decade; in order to balance the budget while exempting programs such as defense, veteran benefits, Social Security, and Medicare from cuts, all other federal spending would have to be reduced 85%.
