President Joe Biden delivered a speech Wednesday touting his record on the economy as a vindication of the progress made through "Bidenomics" – but persistently high inflation continues to force Americans to stretch their household budgets as prices remain elevated.
During his remarks at an event in Chicago, Biden said that "I’m not here to declare victory on the economy. I’m here to say we have a plan that’s turning things around incredibly quickly." He went on to note that inflation remains a challenge facing the economy but didn’t acknowledge the role played by high levels of federal spending in fueling inflation.
"Bringing down inflation remains one of my top priorities," Biden said. "Today, inflation is less than half – less than half of what it was a year ago – and that inflation caused by Russia and by the war in Ukraine and by what was going on."
INFLATION TO REMAIN HIGH FOR 2023, 2024: NABE SURVEY
Before Biden took office, the federal government ran a record-setting budget deficit of $3.1 trillion in fiscal year 2020 amid a surge of spending on COVID-19 relief programs. Many of those programs continued in FY2021, which included the first eight months of Biden’s term and the enactment of Democrats’ $1.9 trillion American Rescue Plan, which combined to keep the FY2021 deficit over $2.7 trillion. The deficit narrowed to nearly $1.4 trillion in FY2022 as more pandemic spending ended, although it was still the fourth-largest annual deficit in U.S. history.
Consumer prices began to surge in mid-2021 when high spending levels combined with supply chain woes and sent inflation soaring from 1.7% in February to 7% in December. Inflation would later peak at 9.1% in June 2022, when it would begin its gradual decline.
The Bureau of Labor Statistics’ latest inflation report, released in mid-June, found that although inflation has cooled it remained at 4% annually in May – double the Federal Reserve’s target rate. Food prices have been a prominent pain point for consumers, as the consumer prices report found that food prices were up 6.7% in May compared to a year ago.
HOW DOES BIPARTISAN BUDGET, DEBT LIMIT DEAL IMPACT SPENDING, DEFICIT?
An overwhelming majority of voters are deeply worried about inflation, as 90% of registered voters said they are "extremely" or "very" concerned about inflation and higher prices in a Fox News Poll conducted from May 19-22, 2023.
Maya MacGuineas, the president of the nonpartisan Committee for a Responsible Federal Budget, told FOX Business, "With the pandemic behind us, it is good to see the economy growing at a steady pace and unemployment remaining low. However, we’re not out of the woods when it comes to inflation, and there is much that still needs to be done about the large and growing deficits and debt that our country will face over the coming years and decades."
FEDERAL DEFICIT TOPS $2 TRILLION OVER LAST 12 MONTHS
The CRFB released a report earlier this month that the federal government’s budget deficit grew to $2.1 trillion over the past 12 months and is more than twice as large as the pre-pandemic deficit. The think tank noted that spending increased by 11% as tax revenue fell by 6% over the same period, causing the deficit to swell to 8.1% of U.S. gross domestic product (GDP) – a level that’s more than three times higher than the historical average of 2.5%, and three percentage points higher than 2019.
MacGuineas said that to address the growing federal deficit, "The president should build on the success of the bipartisan Fiscal Responsibility Act by proposing more deficit reduction and offering solutions to the nation’s ailing trust funds."
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"The Social Security and Medicare trust funds are just a decade out from exhaustion, and the ‘do nothing’ plan is to allow for large, across-the-board cuts to benefits," she added in reference to the trust funds that help finance the major entitlement programs along with payroll tax revenue. "Instead of demagoguing these two important programs, the president should work with Congress on forming a fiscal commission that puts everything on the table – Social Security, Medicare, and taxes included – to put our nation’s debt on a downward sustainable path."
FOX Business' Megan Henney contributed to this report.
