President Joe Biden plans to highlight deficit reduction in remarks noting that the government will pay down the national debt this quarter for the first time in six years
WASHINGTON — President Joe Biden plans to highlight deficit reduction in remarks Wednesday at the White House, noting that the government will pay down the national debt this quarter for the first time in six years.
Biden will emphasize how strong job gains have increased total incomes and led to additional tax revenues that have improved the government’s balance sheet, said a White House official who previewed the speech on condition of anonymity.
Besides the quarterly reduction in the national debt, the Treasury Department estimates that this fiscal year’s budget deficit will decline to $1.5 trillion. That decrease marks an improvement from initial forecasts and would likely put the annual deficit below $1.3 trillion.
The Democratic president has placed renewed emphasis on deficit reduction going into the midterm election, with administration officials saying that the burst of $1.9 trillion in coronavirus relief approved in 2021 has already paid off in the form of faster growth that now makes it easier to stabilize government finances.
Deficit reduction also matches a priority of Sen. Joe Manchin of West Virginia, the key Democratic vote in the evenly split Senate who blocked the passage of Biden’s domestic and environmental agenda in December. The reduction also occurs amid rising interest rates on US Treasury notes, a result of inflation running at a 40-year peak and the Federal Reserve’s efforts to reduce price pressures.
When unveiling his budget plan in March, Biden said that after his Republican predecessor’s “fiscal mismanagement” his administration is “reducing the Trump deficits and returning our fiscal house to order.”
Norman Ornstein, an emeritus scholar at the conservative American Enterprise Institute, noted that deficits are often “abstract” for voters. The recent low interest rates have also muted any potential economic drags from higher deficits, which have risen following the COVID-19 pandemic and, separately, the 2008 financial crisis, to help the economy recover.
“They’re more likely to respond to things that are in their wheelhouse or that they believe will have a more direct effect on their lives,” Ornstein said. Deficits are “a step removed for most voters, and we’ve been through periods where we’ve had the big deficits and debt and it’s not like it devastated directly people’s lives.”
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