Biden Emphasises Fiscal Responsibility as the Deficit Declines!
President Joe Biden will emphasize deficit reduction in remarks at the White House on Wednesday, emphasizing that the government will pay down the national debt for the first time in six years this quarter.
According to a White House official who previewed the speech on the condition of anonymity, Biden will underscore how strong job gains have increased total earnings and led to higher tax revenues that have strengthened the government’s balance sheet.
Aside from the quarterly reduction in the national debt, the Treasury Department predicts a $1.5 trillion reduction in the fiscal year’s budget deficit. This is a significant improvement above initial projections, bringing the annual deficit below $1.3 trillion.
Going into the midterm elections, the Democratic president has renewed his focus on deficit reduction, with administration officials claiming that the $1.9 trillion in coronavirus relief approved in 2021 has already paid off in the form of faster growth, making it easier to stabilize government finances.
Deficit reduction is also a goal for Sen. Joe Manchin of West Virginia, the swing vote in the Senate’s evenly divided Democratic caucus who thwarted Biden’s domestic and environmental program in December.
Inflation is at a 40-year high, and the Federal Reserve is attempting to reduce price pressures, thus the drop comes at a time when interest rates on US Treasury notes are rising.
As Democrats fight to keep control of Congress, it’s uncertain whether increased budgetary restraint will help Biden politically.
Bill Clinton and Barack Obama, his two most recent Democratic predecessors, both trimmed budget deficits before leaving office and seeing their Republican successors use the savings on tax cuts.
Nonetheless, Biden aims to set himself apart from former President Donald Trump, whom he defeated in 2020. Among Trump’s many promises, he promised to reduce the national debt, but he has yet to achieve so in any fiscal quarter of his presidency. Biden has consistently targeted that unfulfilled commitment.
After his Republican predecessor’s “fiscal mismanagement,” Biden declared in March that his administration is “cutting the Trump deficits and restoring our fiscal house to order.”
One of Biden’s concerns is that voters have mainly ignored deficit rises and rarely applauded budget reductions. While pollsters may mention the notion of decreasing deficits with voters, health care, incomes, and inflation are often at the forefront of voters’ minds while casting ballots.
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Deficits are typically “abstract” for voters, according to Norman Ornstein, an emeritus scholar at the conservative American Enterprise Institute.
Low-interest rates have also masked any possible economic effects from increased deficits, which have risen in response to the COVID-19 epidemic and, separately, the 2008 financial crisis, in order to aid the economy’s recovery.
“Things that are in their wheelhouse or that they believe will have a more direct effect on their life,” Ornstein said. Deficits are “a step removed for most voters,” he says, “and we’ve had eras where we’ve had enormous deficits and debt, and it’s not like it destroyed people’s lives directly.”