The U.S. Will Pay Down the National Debt for the First Time in Six Years


The president makes the announcement of a decrease in deficit against current unfavorable public opinion. Image from Wikimedia Commons.

On Wednesday, May 4th, President Joe Biden stated that the federal government will pay down the national debt for the first time in six years, just before the Federal Reserve announced a spike in interest rates in order to manage inflation that same afternoon.

“Bringing down the deficit is one way to ease inflationary pressures in an economy, where a consequence of a war and gas prices and oil, food, and it all – it’s just a different world right this moment because of Ukraine and Russia,” the President said. Deficit spending is when the government spends funds raised by borrowing rather than taxing, which has posed a lot of debt for the U.S. to pay off.

Biden emphasized that strong job gains increased total incomes, leading to additional tax revenues and thereby improving the government’s balance sheet. Additionally, the Treasury Department estimates that this fiscal year’s budget deficit will decrease by $1.5 trillion, which is an improvement from previous forecasts of $1.3 trillion.

Biden, in his pursuit of deficit reduction, cited the dip in national debt as something former President Donald Trump failed to do. “The bottom line is the deficit went up every year under my predecessor before the pandemic and during the pandemic. It has gone down both years since I’ve been here,” said Biden. “Why is it important? Because bringing down the deficit is one way to ease inflationary pressures.”

Biden’s actions seem to fall in line with his efforts to raise the public opinion of him. He already received criticism from Republicans about the economic strain the $1.9 trillion coronavirus relief package had, alongside 40-year high inflation rates and skyrocketing commodity prices resulting from the Russia-Ukraine war. These struggles pose a threat for Democrats, especially with upcoming midterm elections just months away.

However, many wonder if greater fiscal responsibility will be helpful for Biden politically as Democrats try to maintain their control of the Senate and House, considering his most recent Democrat predecessors, Barack Obama and Bill Clinton, cut budget deficits as well only to have their Republican successors use the money on tax cuts.

The expected $26 billion drop this quarter is actually expected to be short-lived, as the total debt sits at around $23.9 trillion and continues to rise each quarter. And while Biden’s administration foresees the cost of servicing the debt to be low enough in order to sustain the borrowing, critics say there need to be structural changes made to improve things overall.

Douglas Holtz-Eakin, former director of the Congressional Budget Office and now leading the center-right American Action Forum, states, “There needs to be a real fiscal restructuring because we continue to see these trillion-dollar deficits as far as the eye can see…What they’re doing is essentially deferring the need to do anything real and genuinely fix the programs that are important to people.”

Another challenge for Biden stems from the fact that for many voters, deficits are an abstract strategy that is often not on their minds when making decisions during elections, usually blocked by more obvious aspects such as healthcare, incomes, and inflation. 

“[Voters are] more likely to respond to things that are in their wheelhouse or that they believe will have a more direct effect on their lives,” said Norman Ornstein, an emeritus scholar at the conservative American Enterprise Institute. He says that 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.”