WASHINGTON (Pakistan Point News / Sputnik - 22nd October, 2022) The US budget deficit fell by a record $1.4 trillion for fiscal year 2022 as COVID-related spending dried up while revenue from wage and employment gains boosted the government's coffers, Treasury Department data showed Friday.
The budget deficit for the fiscal year through September was practically halved to $1.38 trillion, from a revised $2.78 trillion the previous year, the data showed.
Before the outbreak of the coronavirus pandemic, the deficit totaled $980 billion during fiscal year 2019.
Analysts observed that the latest numbers would have been even lower if not for the student loan forgiveness program - where President Joe Biden's executive order canceled up to $10,000 in student loans for borrowers under a certain income threshold, and up to $20,000 for other qualified recipients.
The student loan forgiveness program carries a $430 billion impact on the deficit in the month of September and has drawn sharp criticism from Republicans opposed to President Biden for its cost and scale.
With inflation stubbornly hovering near 40-year highs despite aggressive rate hikes that economists warn could push the economy into a recession, Treasury Secretary Janet Yellen acknowledged that the budget deficit needed to come down further.
"It is important to have a credible fiscal policy and to make sure the debt is sustainable over time," Yellen told reporters on Friday.
As a share of gross domestic product, the deficit came in at 5.5%. The GDP-deficit ratio hit a record 15% in 2020 on pandemic relief spending. Before the crisis, in 2019, the deficit was 4.7% of GDP. That had widened by a percentage point from 2017, the year before tax cuts under former President Donald Trump took effect.
