The federal budget deficit was $1.4 trillion for this past fiscal year, the Congressional Budget Office estimated on Tuesday.
The figure clocked in at about half of the $2.8 trillion it was in fiscal year 2021, a decline driven by a pullback in pandemic relief spending and an increase in taxes thanks to the economic recovery. Revenues were about $850 billion, or 21% higher than last year, while spending was about 8% lower than last year, the nonpartisan group said in a report.
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“Revenues in all major categories, but notably individual income taxes, were greater than they were in fiscal year 2021. Spending related to the coronavirus pandemic declined,” the report said.
The report included outlays related to student loan forgiveness, which amounts to an estimated $426 billion in costs and was just recently announced. In August, the Biden administration moved forward with canceling up to $20,000 of student loan debt for borrowers who earn less than $125,000 annually.
The news about the lower budget deficit was anticipated, as deficits over the previous two years averaged about $3 trillion, according to Maya MacGuineas, president of the Committee for a Responsible Federal Budget. She pointed out that the deficit has declined as the economy recovers and pandemic borrowing runs off but still said $1.4 trillion is no cause for celebration.
“The budget is also benefiting from the short-term effects of inflation and higher revenues, though over the longer run, this will cause a fiscal deterioration,” MacGuineas said. “There have been attempts by the administration to take credit for the decline in the deficit compared to last year, but in reality, their actions have added more than $4.8 trillion to the debt over the coming decade.”
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The news comes after the national debt surpassed $31 trillion for the first time earlier this month — just a mere nine months after it crossed the $30 trillion mark and only five years after hitting $20 trillion.
