The initial year of the Biden administration produced the second-largest federal budget deficit in history. The 2021 deficit is $2.77 trillion, $360 billion less than the record deficit of $3.13 trillion incurred in 2020. The deficits, which would have been unimaginable in the recent past, have been created by multiple trillions spent on COVID relief and “economic recovery.”
The White House stated on Friday proudly declaring that this year’s deficit is $897 billion less than what is predicted for the 2022 Biden budget, which will be a new all-time high.
Treasury Secretary Janet Yellen said that the budget statement is “further evidence” that the national economy is in “the midst of a recovery.” She added that the current “economic progress” is the “direct result” of the administration addressing the pandemic and passing the American Rescue Plan.
Acting Director of the Office of Management and Budget Shalanda Young said that the budget numbers are “further proof” that the administration’s plan for the economy is working.
Yellen and Young urged Congress to pass the remainder of Biden’s “Build Back Better” plan in 2021. That would require the House passing the $1.2 trillion infrastructure bill already passed by the Senate and both houses passing some version of the massive $3.5 trillion budget reconciliation spending bill.
Since negotiations are continuing on the budget reconciliation bill and it has not been drafted yet, it was not included in the current deficit report.
The 2021 deficit of $2.77 trillion is more than twice the amount of the pre-2020 record deficit of $1.4 trillion. The deficit produced in 2009 came from the Obama administration’s massive stimulus and new spending packages following the 2008 financial crisis.
Republicans spent years rallying against the massive deficits incurred under Obama, and the GOP continually promised to cut spending and eliminate budget deficits if they could only retake Congressional majorities. As things turned out, Republicans did control the House, Senate, and White House between 2016 and 2018. Nonetheless, deficits are running at record levels with no sign of slowing down, and the national debt is preparing to blast past $30 trillion soon.
Overall federal spending increased by 4.1 percent to more than $6.82 trillion this year.