President Biden unveiled a historically significant 2022 budget of $ 6 trillion on Friday, arguing in Congress that now is the time for America to spend big.
In its first budget proposal, which includes roughly $ 4 trillion in hoped-for infrastructure and planned spending for families in the coming years, there would be continuing deficits and the national debt would continue to rise, even as it grows. eclipses the country’s gross domestic product, or GDP.
In FY2022, public debt is expected to rise to $ 26.3 trillion, while GDP is expected to rise to $ 23.5 trillion. Although he has campaigned for moderation to some extent, Mr Biden’s budget is, even in the words of White House officials in a call with reporters on Friday, “transformational” and assuming a role. broader for the federal government in the social safety net.
Mr Biden’s proposed budget for fiscal year 2022 exceeds the budget proposed by former President Trump last year by $ 4.8 trillion, and comes after trillions the United States has already spent to fight the dual health and economic crisis caused by the COVID-19 pandemic.
Budget projections show that a price tag of $ 6 trillion is just the start, with spending increasing steadily each year until the budget reaches $ 8.2 trillion in 2031. Budget projections show that the Debt as a percentage of gross domestic product has already reached 100% and will rise to 117% by 2031, more than the debt-to-GDP ratio of the days of World War II. And by 2031, interest on the debt alone would cost nearly $ 914 trillion – more than the federal government is currently spending on the military or education.
The White House’s argument that now is the time to spend big is based on low interest rates and the urgent need to improve roads, bridges and jobs. What officials in the Biden administration are not categorically saying is that Democrats currently control the White House, Senate, and House, a potentially unique opportunity for Democrats to implement their agenda.
“We certainly believe that the president’s budget improves the long-term fiscal outlook because his policies are more than paid for in the long term,” Deputy Director of the Bureau of Management and Budget, Shalanda Young, said at the meeting. conference call with reporters on Friday morning.
Young noted that the American Jobs Plan and the American Families Plan are “fully compensated within 15 years.”
Mr Biden has previously said he wants to pay for his infrastructure and family projects by raising taxes for those who earn more than $ 400,000 and increasing the corporate tax rate to 28%, from the current 21%. . The highest corporate tax rate was 35% before the Trump-era tax cuts.
It’s unclear how the US Jobs Plan and the US Family Plan would affect real annual GDP growth, which the Biden administration says will be 2% in 10 years without these two plans. In a call with reporters on Friday, White House officials admitted there would be “some near-term inflation”, although they expect this to subside in the years to come. .
The president’s proposal calls for a $ 500 million increase in homeless assistance grants; increase funds for civil rights offices and activities across government; provides the most discretionary funding ever to the Centers for Disease Control and Prevention ($ 8.7 billion); and invest $ 936 million in a new initiative to accelerate environmental and economic justice at the Environmental Protection Agency. The budget also calls on Congress to tackle prescription drug prices and expand medicare.
The President’s budget request for the Pentagon is $ 715 billion, a 1.6% increase from the current budget. This includes a $ 5.1 billion enhancement to the Pacific Deterrence Initiative intended to maintain the US advantage over China, which Defense Secretary Lloyd Austin calls the ministry’s “pace challenge.” . The Pentagon’s budget request includes $ 617 million in new investments to fight climate change. It is also asking for more funding for COVID-19 and pandemic response activities, such as testing and medical research.
Mr. Biden’s budget proposal is just that – a proposal. A president’s budget is a blueprint, giving a clear picture of a president’s priorities. The ball is now in Congress’ court, and members will be massaging their own ideas on what the budget should look like in the weeks and months to come. Mr Biden has already described much of the spending he wants in the US Jobs Plan and the US Family Plan.
Republicans, who have already called Mr. Biden’s proposals too massive, are sure to oppose not only the $ 6 trillion price tag for 2022, but also steadily increasing budgets and rising prices. the national debt that the White House projects into the future. The national debt, which has increased by around 74% under former President Barack Obama in eight years and by around 33% under Mr. Trump in four years, has increased by more than $ 3 trillion in just one year since the start of the pandemic.
The budget proposal comes as the White House continues to negotiate with Republicans and Democrats over the. Republicans have offered to spend less than $ 1 trillion on infrastructure, far less than Mr. Biden initially proposed, but also more than Republicans initially proposed. Republicans want an infrastructure package to focus exclusively on so-called “hard” infrastructure, like roads, bridges and tunnels, while Democrats want the package to be much larger.
Mr Biden sends his budget to Congress well beyond a usual deadline for a president, after a delayed transition and because the Biden administration still does not have a confirmed director of the OMB. Mr Biden initially proposed Neera Tanden for the job, but she withdrew from the review when it became apparent that she lacked sufficient support in the Senate.
Budget hawks immediately voiced concerns that Mr Biden’s budget would increase the deficit and debt.
“The budget offers $ 5,000 billion in spending and tax breaks and pays only three-quarters of the cost, leaving nearly $ 1.4 trillion in higher debt,” said the chair of the Federal Budget Committee manager, Maya MacGuineas, in a statement. “Debt on budget would hit new records almost every year. Also, before adopting billions of dollars in new initiatives, we need a plan to fund or reduce what we are already committed to. Any comprehensive plan to invest in the future must face our unsustainable financial outlook. We must work to leave our children with a strong economy and a healthy budget, not a mountain of debt. “
Congress has until the end of September to pass 12 appropriation or spending bills before public funding runs out.
– Ellee Watson of CBS News contributed to this report.