White House Press Secretary Karine Jean-Pierre told reporters on Tuesday that President Joe Biden has reduced the deficit in a meaningful way since the start of his tenure, a claim which comes as House Republicans insist on broader spending reforms.
One reporter noted that House Speaker Kevin McCarthy (R-CA), with whom the commander-in-chief has been negotiating over moves to raise the debt ceiling and implement future spending caps, said Democratic officials refuse to decrease expenditures. When asked if she agrees that Democrats “have a spending problem,” Jean-Pierre at first answered with a simple “no” and later said Biden “believes in dealing with the deficit in a real way.”
“The President takes this very seriously,” she commented. “He has proposed reducing the deficit by eliminating tax breaks for carried interest loopholes, retirement for wealthy, real estate investors, and cryptocurrency.”
Jean-Pierre said that Biden had reduced the federal budget deficit, which refers to the shortfall between annual tax collections and spending, by some $1.7 trillion over the past two years. Other senior White House officials have repeatedly made similar statements, ostensibly referencing the decrease in deficits from $3.1 trillion in fiscal year 2020 to $1.4 trillion in fiscal year 2022, as recorded in data from the Office of Management and Budget.
The administration officials have failed to note, however, that the deficits in fiscal year 2020 and fiscal year 2021 are attributable to stimulus packages meant to increase economic activity amid the lockdown-induced recession, one of which Biden signed after the nation was no longer in a recession. The White House has also neglected to mention that the $1.4 trillion deficit in the last fiscal year is still larger than any other deficit before the lockdowns.
Beyond references to proposed tax increases for billionaires, more severe tax penalties on corporate stock buybacks, and reductions in subsidy expenditures, Jean-Pierre said that the budget framework introduced by the White House earlier this year would decrease deficits by $3.0 trillion over the next decade. House Republicans have meanwhile passed a bill that would cap spending at fiscal year 2022 levels, allow for 1% annual increases, and raise the debt ceiling until the start of the next fiscal year.
The debt ceiling, a statute established by lawmakers which prevents the government from spending beyond a predetermined national debt limit of $31.4 trillion, exceeded the threshold earlier this year. Treasury Secretary Janet Yellen and other officials have warned that continued negotiations may induce a failure to increase the debt ceiling before the first day of June and could cause a worldwide financial crisis as the nation defaults on obligations.
The national debt, on the other hand, now surpasses $31.7 trillion and serves as a continual damper on economic growth, while elevated interest rates have weighed on the budget as lawmakers are forced to devote more revenues toward servicing the debt.
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McCarthy asked fellow Republicans in a closed-door meeting on Tuesday to “hang with me on the debt limit” since he and Biden are “nowhere near a deal yet” with respect to spending. Biden had characterized the most recent discussions as “productive” and affirmed that “the only way to move forward is in good faith toward a bipartisan agreement.”