President Joe Biden took aim and the nation’s debt and deficit in his State of the Union address on Thursday, but several of his financial claims were false, according to some budget experts, including his claim that he cut the deficit by $1 trillion last term.
“He made several false and misleading statements, but, you know, that’s nothing new,” said David Walker, the former Comptroller General of the U.S. and an advisory board member for Main Street Economics. “He hasn’t done anything meaningful to deal with the deficit and mounting debt burdens.”
Biden was correct that the deficit decreased, but wrong about why the deficit decreased. The U.S. deficit declined from $2.8 trillion in fiscal year 2021 to $1.7 trillion in 2023 because emergency COVID-19 spending ended.
“This is not because President Biden cut the deficit. If anything, it is in spite of it,” according to the Committee for a Responsible Federal Budget, a nonpartisan group focused on financial issues. “Deficits fell from a COVID-relief-driven record high and still remain above pre-pandemic levels.”
The group further noted that “the laws and executive actions President Biden has signed have added to the deficit on net, not reduced it.”
Walker said Biden’s State of the Union was more of a campaign speech than anything else.
Biden did call for more federal revenue in his address. Biden said corporations and the wealthy should pay more to cut the deficit further.
“It’s my goal to cut the federal deficit another $3 trillion by making big corporations and the very wealthy finally beginning to pay their fair share,” he said.
Biden proposed raising the minimum corporate tax rate from 15% to 21%. Though unspoken in his Thursday night address, Biden also will propose a 33% increase in the overall corporate tax rate, increasing it from 21% to 28%, according to a White House media briefing held earlier Wednesday.
In addition, the president said billionaires should pay a minimum 25% personal income tax.
Walker said more revenue was only part of the issue.
“There’s no question we’re going to have to have more revenues,” he told The Center Square. “We can debate how best to get it all right. We’re not going to be able to grow out of this problem. But the primary problem is government’s grown too big, spends too much, and, we have to reform social insurance programs, we’ve got to reprioritize and reduce discretionary spending.”
Walker and Main Street Economics have called for a fiscal commission to help address longstanding financial issues within the government.
In January, the House Budget Committee advanced a bill to create a bipartisan fiscal commission designed to keep the federal government from going broke. The measure would create a fiscal commission that would aim to improve the federal government’s financial situation and eventually put the nation on a sustainable fiscal path. The fiscal commission would also have to “propose recommendations designed to balance the budget at the earliest reasonable date, including at minimum stabilizing the debt-to-GDP ratio at or below 100%” within 10 years of its creation.
In addition to a fiscal commission, Walker said there must be a constitutional convention to enact a fiscal responsibility amendment. And taxpayers need an enforcement mechanism to keep the federal government on track.
Walker suggested that enforcement might be achieved through 12-year term limits put in place if lawmakers fail to follow a fiscal responsibility amendment. Another option: Not letting sitting lawmakers seek another term if they can’t follow the amendment.
Just what such an amendment would look like would ultimately be determined by the convention, Walker said.
“You’ve got to have enforcement mechanisms and ultimately the convention determines what those are,” he said.
