Originally Published: 21 OCT 22 13:36 ET

By Alicia Wallace, CNN Business

(CNN) -- The US budget deficit was slashed in half during fiscal year 2022, a record $1.4 trillion drop driven by the winding down of massive pandemic-related spending and a jump in revenues for the federal government as jobs and wages surged during the economic recovery.

Final figures released Friday by the Treasury Department show that the annual budget shortfall fell to $1.38 trillion during the fiscal year that ended September 30, marking the second year in a row the deficit has shrunk. In 2021, the deficit hit $2.78 trillion — a figure that is still historically high. Before the Covid-19 pandemic, the deficit totaled $980 billion during fiscal year 2019.

The latest numbers would have been even lower if not for the student loan forgiveness program -- President Joe Biden's executive order to cancel up to $10,000 in student loans for borrowers under a certain income threshold, and up to $20,000 for Pell Grant recipients — according to the Treasury Department. That program, which has drawn sharp criticism from Republicans for its cost and scale, carries a $430 billion impact on the deficit in the month of September, escalating it to the fourth-largest monthly budget shortfall on record.

Biden is scheduled to tout the program, which officially launched this week, in remarks later Friday at Delaware State University. White House officials have acknowledged the total cost, but argue the benefits to the borrowers and the broader economy far outweigh the risks, particularly in light of the expectation that the deficit numbers would plummet as they did.

The President touted the record-breaking deficit decline Friday morning, saying: "We're going from a historically strong economic recovery, to a steady and stable growth while reducing the deficit."

Spending topped $6.27 trillion, a decline of $550 billion from last fiscal year. Revenue increased by more than $850 million to just shy of $4.9 trillion.

But fiscal watchdog group the Committee for a Responsible Budget said Friday that the latest budget is instead a "reminder of how precarious our fiscal situation remains."

"It should be no surprise that the Federal Reserve is having a hard time getting inflation under control when fiscal policymakers keep making their job even harder with more borrowing," Maya MacGuineas, president of the Committee for a Responsible Fiscal Budget, said in a statement.