Joe Biden’s latest tool to combat
inflation? The deficit


The price of fuel is rising and rents are way too high and the election is scheduled. With rising
costs and inflation of living degrade the country’s economic outlook and the mood of President
Joe Biden have revived a recent remark to put clear how serious he regards the economic state
of the nation: “I reduced the federal deficit.”

Cuts to government spending aren’t the top priority for many American people, so the idea of
balancing budgets for the federal government isn’t likely to inspire Democratic voters to vote in
midterm elections. The federal budget deficit barely shows up in Gallup’s recent survey of the
nation’s most pressing issues however, inflation is on the top of the list of issues.

With the midterm elections coming up, and a fresh inflation estimate set to be released this
week The White House is now making the reduction in deficits a central element of its efforts to
convince people that the economy is improving — and also to shift the public’s perception of its
most important problem in politics.

It’s a turning point: Biden campaigned on wanting to be a transformational president. He pushed
for huge spending programs through 2021 and dismissed concerns of inflation to support his
plans. But Biden’s administration is more cautious about large-scale budgets for the

This shift began with his State of the Union speech earlier in the year. “My plan to fight inflation
will lower your costs and lower the deficit,” the president said in March. “By the end of this year,
the deficit will be down to less than half what it was before I took office.”

Inflation has been getting slowly worse and has remained at an in the last few months however,
the White House’s communication on the issue really was in full gear in the last few days. Biden
has announced three-pronged strategies that include cutting deficits to combat inflation in the
form of a Wall Street Journal op-ed. Biden has also referred to the deficit in his speeches and
addressed the nation regarding it on Friday. The officials of his administration appeared on the
television screen this week to discuss the budget as well. The White House is planning more
announcements, interviews, and travel for the remainder of the first month.

Biden’s assertion about his policy choices being the reason for the reduction in the gap between
spending and income is not certain. Even if they were correct, it’s still not evident that cutting
federal spending will currently aid in reducing inflation, as per economists. If it can convince that
the typical American is a different matter. But the administration is determined to attempt.

A quick overview of the deficit, as well as Biden’s part in getting it to a
manageable level

The federal deficit refers to the sum the federal government invests in the budget year-round,
over what it’s collected in revenue. This shortfall is added to the nation’s total debt. It is the
United States has run up each year a deficit in the budget from at least the beginning of the
1970s, with the exception of the four years from 1998 to 2002.

The country had its highest deficit ever in the core pandemic years of 2021 and 2020 because of the coronavirus emergency spending by funding through the CARES Act and American
Rescue Plan. Since the spending is coming to an end or completely refunded and tax revenues
have risen with the drop in unemployment and the overall economic recovery picked up in the
past calendar year, its deficit fell in 2021. A further drop is anticipated by the end of the fiscal
year 2022 in September.

In the past few weeks, Biden has taken credit for the reduction in deficit during his State of the
Union address and in his speech all through the month of April and the last month in which he
tried to “remind you again: I reduced the federal deficit” in spite of “all the talk about the deficit
from my Republican friends.”

The focus on deficits is usually the top priority of Republicans rather than Democrats. Most often
you are told about this from congressional Republicans who would like to reduce social welfare
or even take on Democrats for not spending any money any amount at all. A lot of words have
been written about how deficits matter, however, economists who spoke with Vox have said that
they’re important more during periods of high inflation.

The deficits are decreasing. In 2021, the $2.8 trillion surpluses 2021 was less than the historic
$3.1 trillion deficit that was recorded in 2020 which was when Donald Trump was president. The expected deficit in 2022 which is estimated at $1 trillion will result in a greater drop, something
that Trump is being credited for. However, that’s mostly a result of the major spending plans that
will be in place between 2020 to 2021 that are drained the economy, according to a number of
economic experts. Biden’s most popular spending plan known as The American Rescue Plan
increased the deficit by some extent, while also reducing the projected $870 billion deficit
reduction to the reduction of $360 billion that actually took place from 2021 until 2022.

“I’ve heard the president and his administration say over and over again, things like ‘we have
reduced the deficit because of our actions.’ That is only true in a very backward sense,” Marc
Goldwein, the senior vice president of the Committee for a Responsible Federal Budget, which
is a fiscally conservative organization spoke to Vox. “The deficit is coming down year over year
overall despite their actions.”

Also, American unemployment has decreased fast over the past two years. This means that
more people are paying taxes that aid in reducing the government’s spending. In this regard, it’s
the White House that credits its recovery efforts.

The impact of deficits and inflation on the economy is debated

Even even if Biden receives all the credit for reducing the deficit, using the deficit as a weapon
to combat the current inflation rate is a novel strategy for Biden. “Bringing down the deficit is one
way to ease inflationary pressures,” Biden stated in the early days of May. “We reduce federal
borrowing and we help combat inflation.”

Economics experts don’t agree on how much taxing and spending can help fight inflation.

“Not all government spending is clearly inflationary,” Goldwein stated. “But when you’re in a
period of high inflation, you can probably expect the first-order effect of any given increase in
spending or any given cut in taxes is probably going to be inflationary.”

Large deficits could certainly exacerbate the issue if it’s the result of an enormous infusion of
cash into the economy, especially when it is in overdrive, but the main responsibility for
controlling inflation rests with the Federal Reserve, which controls the money supply and
interest rates – in addition, in turn, the White House is emphasizing that part of its economic
strategy: “My predecessor demeaned the Fed and previous presidents have attempted to
influence the Fed’s decisions in a way that was not appropriate during times of increased
inflation. I will not do that,” Biden wrote in an opinion piece in The Wall Street Journal this week.

Biden admits that he has more control over the amount of revenue the government collects in
taxes, and the amount it decides to spend. “Because government is such a large purchaser, and
because it’s such a big part of our economy if you lower the amount of deficit — so you either
increase taxes or you lower spending — you’re going to pull some money out of the economy,
and that can reduce inflationary pressures,” A senior official from the administration who spoke
on terms of anonymity spoke to Vox on the White House’s thoughts regarding the link between
deficit and inflation.

However, there’s a distinct difference between avoiding a rise in inflation through growing
deficits and taking proactive measures to reduce the deficit. If spending is not increased on
programs that place more cash in the pockets of citizens the government could be trying to limit
the demand for products and services. There’s still plenty available in savings accounts as well
as the budgets of local and state governments that could present a challenge along with
logistical and supply chain issues that can’t be resolved through cutting spending and increasing
taxes. However, it’s the White House is suggesting a number of changes in an updated
economic message it’s releasing this month.

The president doesn’t anticipate seeing any major spending in the near future however, knowing
that the government has the ability to combat inflation at the margins with long-term
investments, and tempered expectations for economic growth to come Biden’s strategy is a
chance to make things better.

Biden’s economic race is now a new sprint for the presidency

in his Wall Street Journal op-ed, Biden set out an inflation-fighting strategy to ease the nation to
“stable, steady growth” which includes reducing deficits as only one of three pillars. let the Fed
do its job and make the cost of living more affordable are the remaining two. Biden elaborated
on his message in his speech on Friday, focusing on the report of the May jobs survey which
shows that employment is increasing and unemployment hovering around an all-time low.

He is requesting Congress to change the way the IRS takes taxes from regular Americans as
well as the way billionaires and corporate entities pay taxes in order to not only reduce the
deficit further and fight inflation but also punish price-gouging as well as “corporate greed.”
White House officials this week have also made media appearances as well as public
statements to spread the message and to announce climate and infrastructure investments to
enhance the supply chain.

These latest developments are taking place in a time when inflation is still at or near record
levels and gas prices increase in the summer as travel ramps up, while the markets for energy
remain unstable following Russia’s invasion of Ukraine and the outlook for Democrats in the
midterm elections is getting worse.

A lot of the fixes Biden has proposed will require action from Congress which is something
Biden will do anything to highlight: “I’m doing everything I can do on my own to support families
who are struggling during this period of increased costs. And I’m determined to help them,” he
said on Friday. “But Congress needs to act as well.”

In the context of this overall strategy As part of overall strategy, as part of this larger strategy,
the White House seems to be directing this message of deficit toward the economically
conservative lawmakers in his caucus Congress Senators. Joe Manchin of West Virginia and
Kyrsten Sinema from Arizona have repeatedly posed a challenge to Democrats being able to
pass any economic plan through the Senate Both have expressed concern about the rising cost
of living.

Any proposals or reforms that get through both the House and Senate must satisfy the concerns
of those concerned. So far, Biden’s proposal has strayed from that line through increasing
revenue and investing in a longer-term increase in economic productivity and lower energy
production according to some economists, this could reduce inflation pressures in the longer

The deficit and the pivot to inflation can also be a sign of an old-fashioned presidential power
that has diminished in the recent administrations that is The bully pulpit or the president’s ability
to create agendas, control national discussions, and convince others to follow in the same
direction. Biden has been reported to have been frustrated by his inability to reach out to the
public and formulate a cohesive and coherent message regarding the various issues the
administration is trying to address, from inflation to the price of gas up to the issue of gun
violence as well as the epidemic.

In his speech on Friday evening, the president attempted to explain why he is focused on
affordability and decreasing the deficit using language that Americans might be able to
comprehend “I recognize that families that are struggling might not need to know why the price
is rising. They simply would like them to decrease. However, it’s essential to know what is
causing the problem to be able to take action to fix it.” He declared. “The reason this matters to
families is because reducing the deficit is another way to ease inflation.”

Presidents have seen their power to persuade diminish because of the increasing polarization
between parties, Congress gets harder to unite, and the power of messaging is distributed
across political, media as well as activist groups. For Biden one of the reasons for this issue is
his propensity to make mistakes or be rectified or removed by staff afterward. However, the top
administration official who spoke with us suggested that it’s worth Biden engaging in this kind of
contact: “The president is trying to help people understand the role that this democratically
elected government can play in people’s lives to help improve economic outcomes, and then by
that, help to improve people’s outcomes.”

We’ll find out in the coming months if this type of rhetoric can convince voters. However, by
speaking about it and outlining an action plan for the White House, the White House can
counter Republican claims of excessive government spending and reckless government
borrowing. It can also communicate to the average Americans that it is accountable for its
spending as Americans who are worried about affordability.

However, in order for the plan to work, it’ll be able to reach the average American who may not
understand what deficit means but are aware that the cost of gas and food is increasing. It
doesn’t matter if it’s on TV as well as in person (the White House is hinting at future trips and
speeches) The message needs to be made known. In the context of a larger strategy to be able
to tackle the general malaise and confusion which many Americans feel.