The proposal shows the sweep of Mr. Biden’s ambitions to wield government power to help more Americans attain the comforts of a middle-class life and to lift U.S. industry to better compete globally in an economy the administration believes will be dominated by a race to reduce energy emissions and combat climate change
President Joe Biden will propose a $6 trillion budget on Friday that would take the United States to its highest sustained levels of federal spending since World War II, while running deficits above $1.3 trillion throughout the next decade.
Documents obtained by The New York Times show that Mr. Biden’s first budget request as president calls for the federal government to spend $6 trillion in the 2022 fiscal year, and for total spending to rise to $8.2 trillion by 2031. The growth is driven by Mr. Biden’s two-part agenda to upgrade the nation’s infrastructure and substantially expand the social safety net, contained in his American Jobs Plan and American Families Plan, along with other planned increases in discretionary spending.
The proposal shows the sweep of Mr. Biden’s ambitions to wield government power to help more Americans attain the comforts of a middle-class life and to lift U.S. industry to better compete globally in an economy the administration believes will be dominated by a race to reduce energy emissions and combat climate change.
Joe Biden will discuss Ukraine and Belarus during Joe Biden-Vladimir Putin meeting
Mr. Biden’s plan to fund his agenda by raising taxes on corporations and high earners would begin to shrink budget deficits in the 2030s. Administration officials have said the jobs and families plans would be fully offset by tax increases over the course of 15 years, which the budget request backs up.
In the meantime, the United States would run significant deficits as it borrows money to finance his plans. Under Mr. Biden’s proposal, the federal budget deficit would hit $1.8 trillion in 2022, even as the economy rebounds from the pandemic recession to grow at what the administration predicts would be its fastest annual pace since the early 1980s. It would recede slightly in the following years before growing again to nearly $1.6 trillion by 2031.
Total debt held by the public would more than exceed the annual value of economic output, rising to 117 percent of the size of the economy in 2031. By 2024, debt as a share of the economy would rise to its highest level in American history, eclipsing its World War II-era record.
The levels of taxation and spending in Mr. Biden’s plans would expand the federal fiscal footprint to levels rarely seen in the postwar era, to fund investments that his administration says are crucial to keeping America competitive. That includes money for roads, water pipes, broadband internet, electric vehicle charging stations and advanced manufacturing research. It also envisions funding for affordable child care, universal prekindergarten, a national paid leave program and a host of other initiatives. Spending on national defense would also grow, though it would decline as a share of the economy.
The documents suggest Mr. Biden will not propose major additional policies in the budget, or that his budget will flesh out plans that the administration has thus far declined to detail. For example, Mr. Biden pledged to overhaul and upgrade the nation’s unemployment insurance program as part of the American Families Plan, but such efforts are not included in his budget.
The budget is simply a request to Congress, which must approve federal spending. But with Democrats in control both chambers of Congress, Mr. Biden faces some of the best odds of any president in recent history in having much of his agenda approved, particularly if he can reach agreement with lawmakers on parts of his infrastructure agenda.
If Mr. Biden’s plans were enacted, the government would spend what amounts to nearly a quarter of the nation’s total economic output every year over the course of the next decade. It would collect tax revenues equal to just under one fifth of the total economy.
In each year of Mr. Biden’s budget, the government would spend more as a share of the economy than all but two years since World War II: 2020 and 2021, which were marked by trillions of dollars in federal spending to help people and businesses endure the pandemic-induced recession. By 2028, when Mr. Biden could be finishing a second term in office, the government would be collecting more tax revenue as a share of the economy than almost any point in modern statistical history; the only other comparable period was the end of President Bill Clinton’s second term, when the economy was roaring and the budget was in surplus.
The documents also show the conservative approach Mr. Biden’s economic team is taking with regard to projecting the economy’s growth, as compared to his predecessor’s. Mr. Biden’s aides predict that even if his full agenda were enacted, the economy would grow at just under 2 percent per year for most of the decade, after accounting for inflation. That rate is similar to the historically sluggish pace of growth that the nation has averaged over the past 20 years. Unemployment would fall to 4.1 percent by next year — from 6.1 percent today — and remain below 4 percent in the years thereafter.
Former President Donald J. Trump consistently submitted budget proposals that predicted his policies would push the economy to a sustained annual rate of nearly 3 percent for a full decade. In his four years in office, annual growth only reached that rate once. The final budget submitted by President Barack Obama, when Mr. Biden was vice president, predicted annual growth of about 2.3 percent on average over the span of a decade.
The Biden forecasts continue to show his administration has little fear of rapid inflation breaking out across the economy, despite recent data showing a quick jump in prices as the economy reopens after a year of suppressed activity amid the pandemic. Under the Biden team’s projections, consumer prices never rise faster than 2.3 percent per year, and the Federal Reserve only gradually raises interest rates from their current rock-bottom levels in the coming years.
Mr. Biden has pitched the idea that now is the time, with interest rates low and the nation still rebuilding from recession, to make large up-front investments that will be paid for over a longer time horizon. His budget shows net real interest costs for the federal government remaining below historical averages for the course of the decade. Interest rates are controlled by the Federal Reserve, which is independent of the White House.
Even if interest rates stay low, payments on the national debt would consume an increased share of the federal budget. Net interest payments would double, as a share of the economy, from 2022 to 2031.
A spokesman for the White House budget office declined to comment on Thursday.
Administration officials are set to detail the full budget, which will span hundreds of pages, on Friday in Washington. On Thursday, Mr. Biden is scheduled to deliver an address on the economy in Cleveland.
Comments
Post a Comment