The first year of Joe Biden's presidency resulted in the second-highest U.S. budget deficit on record, totaling $2.77 trillion for 2021. The deficit this year was still $360 billion lower than the all-time high record of $3.13 trillion reached in 2020, the final year of President Donald Trump's administration.
The astronomical deficits in both years follow trillions of dollars in government spending on COVID-19 pandemic relief and recovery.
In a statement Friday, the White House applauded the fact that the actual 2021 deficit was $897 billion less than the deficit forecast in Biden's 2022 budget and $342 billion less than estimated in the 2022 Mid-Session Review.
"Today's joint budget statement is further evidence that America's economy is in the midst of a recovery. The nation's economic progress is the direct result of the Biden-Harris Administration's efforts to enact the American Rescue Plan and address the pandemic," said Treasury Secretary Janet Yellen.
"These budget results are further proof that President Biden's economic plan is working," added OMB Acting Director Shalanda Young.
Both officials called on Congress to pass the rest of Biden's economic agenda this year, which includes a bipartisan $1 trillion infrastructure bill as well as a larger "human infrastructure" bill Democrats are negotiating in the Senate. Progressives wanted the larger bill to spend another $3.5 trillion, but Biden was forced to compromise with moderate Democrats somewhere closer to $2 trillion. Negotiations are ongoing and whatever the final cost of the bill will be, it was not included as part of the deficit report.
Biden's $2.77 trillion deficit for FY 2021 is more than double the pre-pandemic record of $1.4 trillion set in 2009, which was the result of President Barack Obama's stimulus package and other Democrat-led spending initiatives to recover from the 2008 financial crisis.
Excessive government spending under Obama's tenure became a rallying cry for Republicans, who promised to cut spending and balance the budget should they win office. But more than 12 years later, with Republicans having full control of the federal government between 2016 and 2018, budget deficits are higher than ever and the U.S. national debt is quickly approaching $29 trillion.
A joint report from the Treasury Department and the White House Office of Management and Budget said that federal spending increased 4.1% to $6.82 trillion in 2021. Increased spending was offset by an 18.3% increase in government revenue, which came from people returning to work and paying taxes.
The report said the increase in spending came from coronavirus relief legislation enacted by both Trump and Biden.
"Contributing to the dollar increase over FY 2020 were higher outlays for COVID relief programs such as Economic Impact Payments, State and Local Fiscal Recovery Funds, and the Emergency Rental Assistance Program," the budget report stated.
This year's budget deficit was equal to 12.4% of the gross domestic product, or the overall value of the economy, down from 15% of GDP in 2020.