The Treasury Department said Friday the federal budget deficit was 562% higher on a monthly basis compared with September 2021, largely reflecting President Joe Biden’s plans to forgive student debt as several years’ worth of costs were compressed into one month.
Despite the monthly rise, the federal budget deficit decreased by $1. 4 trillion over the fiscal year that ended last month.
Its size roughly decreased by half as a result of the cessation of spending related to coronavirus pandemic alleviation and increased tax receipts as more Americans found employment.
There was a $1 shortfall in the government budget. This year, 38 trillion. That is less than $2. fiscal year 2021: 78 trillion. As evidence that he has handled federal funds responsibly, Biden plans to discuss the data on Friday.
Still, the federal deficit jumped in the final fiscal year month of September because of the Democratic president’s plans to forgive student debt as the Education Department modified the terms of its loans for college and graduate school.
In August, Biden announced a $10,000 cancellation of federal student loans for individuals and households earning less than $125,000 annually.
Forgiveness of an additional $10,000 is available to those who obtained federal Pell Grants to attend college.
According to Biden’s proposal, 20 million people would be entitled to have all of their federal student debt forgiven.
Republican lawmakers have criticized the debt forgiveness as financially irresponsible, saying it’s a giveaway to borrowers who attended college that comes at the expense of blue collar workers.
Republican-affiliated organizations and states have filed lawsuits in an effort to stop the forgiveness. Six states led by the GOP had filed a lawsuit, which a federal judge on Thursday dismissed because the states lacked legal standing. The states want to appeal the judge’s ruling.
The unemployment rate decreased during the past 12 months from 4.7% to 3.5%, which helped the federal finances.
As a result of the job growth, tax receipts increased by 21% over the previous year, but overall spending decreased by 8% as the effects of government aid for the coronavirus receded.
The Congressional Budget Office predicted in May that the federal deficit will decrease in 2023 before beginning to increase in the years to come, reaching $2. 25 trillion in ten years.
Monthly deficit increases by 562% as a result of student loan cancellation.
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