WASHINGTON — The federal budget deficit fell to $1.4 trillion for the 2022 calendar year, down from $2.6 trillion a year ago, as pandemic emergency spending slowed, the economy reopened and tax revenue rose, according to the Treasury Department.
While the annual gap between what the nation spends and what it takes in narrowed, the monthly deficit for December 2022 widened compared with a year ago, suggesting that the deficit will most likely grow again in the year to come. The federal government recorded an $85 billion shortfall last month, up from a $21 billion deficit in December 2021.
The figures released on Thursday come at a moment of heightened attention on the nation’s finances, with Republicans, who now control the House, pledging to push for deep spending cuts and to slash the national debt. Despite the smaller annual shortfall, America’s long-term fiscal picture has darkened somewhat in the last year. The national debt topped $31 trillion for the first time in 2022 and interest rates are rising, increasing the amount of money the United States must pay to investors who buy its debt.
Republicans have been made it clear that they will make balancing the federal budget and reducing the national debt a central focus of their economic agenda this year.
Speaker Kevin McCarthy said this week that Republicans would use their leverage, including the need to raise the country’s debt limit later this year, to corral spending.
“One of the greatest threats we have to this nation is our debt,” Mr. McCarthy said on Fox News. “It makes us weak in every place that we can.”
But Republicans have also prioritized policies this month that would add to deficits. Legislation passed by the House this week would rescind much of the $80 billion that was allocated to the Internal Revenue Service last year to beef up its enforcement capacity. The nonpartisan Congressional Budget Office said that the Republican bill to rescind the money would actually increase the deficit by $114 billion through 2032.
President Biden said on Thursday that he would veto such legislation and assailed Republicans for backing a measure that would add to the deficit and make it easier for the wealthy to cheat on their taxes.
Budget watchdog groups that advocate fiscal restraint have called on lawmakers to enact policies that will stabilize the debt.
“We should not be borrowing $4 billion a day, an apparent debt addiction that is harmful to the economy and the budget,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget. “We hear a lot of talk about fiscal responsibility, but very little action.”