Understanding the National Debt Increase Under President Biden
Since President Biden’s inauguration in January 2021, his marquee pieces of legislation have included the $1.9 trillion American Rescue Plan, the $1.2 trillion Bipartisan Infrastructure Law, and the Inflation Reduction Act. Between his swearing-in and April 2023, the national debt has increased by over $3.5 trillion to approximately $31.4 trillion.
The exact impacts on the national debt of President Biden’s policies are difficult to precisely measure, but the large funds associated with Biden’s marquee legislative initiatives are a significant part of federal spending. Other components that take up a majority of the budget include Social Security, Medicare, and Medicaid.
A survey of over 5,000 adults earlier this year by the Pew Research Center found that 57 percent of respondents viewed reducing the budget deficit as a top priority for the government, up from 45 percent in 2022. For the past several years, the United States’ debt-to-GDP ratio has exceeded 100 percent, meaning that America owes more than it creates.
According to U.S. Treasury Fiscal Data, between fiscal year 2019 and 2020, the national debt increased by over $4 trillion. The increase can likely be attributed to the bills passed by the Trump administration to combat the COVID-19 pandemic, such as the CARES Act, which sought to deliver $1,200 stimulus packages to households alongside other assistance to state and local governments.
The Congressional Budget Office estimates that the Inflation Reduction Act will reduce deficits by $300 billion, which could play a key role in paying off the national debt.
Associate Professor of Political Science at Hofstra University, Paul Fritz, believes that legislation passed during the Trump and Biden administrations have contributed to the national debt, such as the CARES Act and the American Rescue Plan.
“Republicans only want to talk about spending on specific programs, Democrats only want to talk about the lack of income through taxes that contribute to the debt,” Fritz says. “Both sides have a point, but both sides need to think about the other too.”
Few policies divide the two major parties as much as taxes. A study by the Center for American Progress found that recent tax cuts have increased the debt ratio. The study also says that the Bush and Trump tax cuts added $10 trillion to the debt and have increased the debt ratio by 57 percent since 2001.
President Biden’s proposed tax increases on single filers making over $400,000 each year would increase government revenue, although whether that money goes towards mitigating the national debt is uncertain.
First-year political science major at Hofstra University, Patrick Bruso, believes that the government needs to allocate more funds to other sectors.
“The military needs to be reined in, and we shouldn’t be spending so much money on defense spending,” Bruso says.
The current status of the American economy is likely to have an impact on who wins the presidency in 2024. During the 2022 midterms, the economy was at the top of voter’s minds according to a Pew Research Center survey.
If Congress is unable to raise the debt ceiling, it could lead to a “steep economic downturn” according to Treasury Secretary Janet Yellen. According to the Council on Foreign Relations, the consequences of a breach of the debt ceiling could include a downgrade in America’s credit rating. Consequently, the default could spread to homeowners’ pockets as consumer confidence declines. In addition, the United States could lose as many as three million jobs.
Fritz says that if the government were to default the sitting president would be negatively impacted, meaning that Biden’s odds of re-election could suffer. “But it also depends on who the American people blame,” says Fritz. A recent survey by ABC News and The Washington Post found that if the debt limit is not raised, 39 percent of respondents would mainly blame Republicans in Congress whereas 36 percent would mainly blame Biden.
The national debt could also increase if plans such as student loan forgiveness end up passing through.
Moreover, the increase in the national debt under the Biden administration thus far can likely be attributed to actions by both Biden and Trump to combat the COVID-19 pandemic and champion key legislative initiatives.
At the same time, the long-term impacts of Biden’s policies on the debt have yet to be determined and may take years to do so.
“The challenge of balancing revenues and expenditures for the federal government is the foundational issue for addressing budget deficits and the national debt,” says Executive Dean of Hofstra University’s Peter S. Kalikow School of Government, Public Policy and International Affairs, Meena Bose. “Elected officials and the public need to engage in a comprehensive assessment of U.S. priorities in the coming years and decades, and then determine how to fund those priorities.”