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The numbers: The U.S. federal budget deficit fell to $1.37 trillion in the just-ended fiscal year, the Treasury Department said Friday, half the amount of last year’s shortfall.
Key details: The Treasury said the deficit fell by $1.4 trillion in fiscal 2022, the largest one-year decrease on record. Surging tax receipts totaling $4.9 trillion helped cut the deficit, as did falling outlays.
Spending was $6.3 trillion for the fiscal year, a drop of 8.1%. That partly reflects reductions in COVID-related spending.
The deficit would have been lower had student loan cancelation costs not been included. President Joe Biden in August announced $10,000 in federal debt cancelation for those with incomes less than $125,000 a year, or households making less than $250,000. Those who received federal Pell Grants are eligible for extra forgiveness.
The loan-cancelation costs contributed to a 562% increase in the monthly deficit for September. The government’s fiscal year runs October through September.
Big picture: Treasury Secretary Janet Yellen said in a statement that the report “provides further evidence of our historic economic recovery, driven by our vaccination effort and the American Rescue Plan.”
Meanwhile, a budget watchdog said the figure was no cause for celebration.
“We borrowed $1.4 trillion last year. That is not an accomplishment — it’s a reminder of how precarious our fiscal situation remains,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
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