President Biden on Friday unveiled an historically large $6 trillion 2022 budget, making his case to Congress that now is the time for America to spend big.
In his first budget proposal, which includes roughly $4 trillion in hoped-for infrastructure and families plan spending, there would be continued deficits and the national debt would continue to rise, even as it eclipses the country’s Gross Domestic Product or GDP. In fiscal year 2022, the debt held by the public is expected to be $26.3 trillion, while GDP is expected to be $23.5 trillion. Despite campaigning to an extent on moderation, Mr. Biden’s budget is, even in the words of White House officials on a call with reporters Friday, “transformational” and assumes a broader role for the federal government in the social safety net.
Mr. Biden’s proposed budget for fiscal year 2022 surpasses former President Trump’s proposed budget last year of $4.8 trillion, and comes after trillions the U.S. has already spent to battle the dual health and economic crises brought about by the COVID-19 pandemic. Budget projections show a $6 trillion price tag is just the beginning, with spending steadily increasing each year until the budget reaches $8.2 trillion in 2031. Budget projections show debt as a percentage of Gross Domestic Product has already reached 100%, and will increase to 117% by 2031.
The White House argument that now is the time to spend big is predicated on low interest rates and the urgent need for better roads, bridges and jobs. What Biden administration officials don’t say outright is that Democrats currently control the White House, Senate and the House, a potentially once-in-a-generation 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 over the long run,” Office of Management and Budget Deputy Director Shalanda Young said on the conference call with reporters Friday morning.
Young noted that the American Jobs Plan and the American Families Plan are “fully offset within 15 years.”
Mr. Biden has already said he wants to pay for his infrastructure and families plans by increasing taxes on those making more than $400,000, and by increasing the top corporate tax rate to 28% up from its current rate of 21%. The top corporate tax rate was 35% before the Trump-era tax cuts.
It’s not clear how the American Jobs Plan and American Families Plan would affect real annual GDP growth, which the Biden administration estimates will be 2% in 10 years if those two plans do not go into effect. On a call with reporters Friday, White House officials admitted that there will be “some short term inflation,” although they expect that to settle down in the years to come.
The president’s proposal shows defense spending increasing slightly in 2022. It provides a $500 million increase for Homeless Assistance Grants; increases funds for civil rights offices and activities across the government; provides the most ever discretionary funding for the Centers for Disease Control and Prevention ($8.7 billion); and would put $936 million into a new Accelerating Environmental and Economic Justice Initiative at the Environmental Protection Agency. The budget also calls on Congress to address prescription drug prices and to expand Medicare.
But Mr. Biden’s budget proposal is just that — a proposal. Congress has the final say, and members will be molding and massaging their own ideas of what the budget should look like in the weeks and months ahead. A president’s budget is a blueprint from which Congress can work, and it gives a clear picture of what the president’s priorities are. Mr. Biden has already outlined much of the spending he wants in the American Jobs Plan and American Families Plan.
Republicans, who have already been blasting Mr. Biden’s proposals as too massive, are sure to balk at not only the $6 trillion price tag for 2022, but also at the ever-increasing budgets and increasing national debt the White House projects into the future. The national debt, which grew by roughly 74% under former President Barack Obama in eight years and roughly 33% under Mr. Trump in four years, has increased by more than $3 trillion in the barely one year since the pandemic began.
The budget proposal comes as the White House continues to negotiate with Republicans and Democrats on the. Republicans proposed spending less than $1 trillion on infrastructure, far less than what Mr. Biden had originally pitched, but also more than Republicans had offered initially.
Mr. Biden is sending his budget to Congress well beyond a deadline than is typical for a president, after a delayed transition and as the Biden administration still lacks a confirmed OMB director. Mr. Biden initially nominated Neera Tanden for the position, but she withdrew herself from consideration when it became clear she lacked sufficient support in th Senate.
Congress has until the end of September to pass 12 appropriations or spending bills before government funding runs out.