The budget stacks together the numerous policy initiatives that Biden has already offered in his first four months in office. He has called for a $2.3 trillion infrastructure proposal, a $1.8 trillion education and families plan, and $1.5 trillion in proposed discretionary spending, though some of this money would be spread out over several years.
Biden has made clear, however, that he wants to negotiate many of these proposals with Republicans, and the figures are likely to fluctuate if talks pick up momentum. But his first formal budget proposal offered Friday locks in his vision of an expanded government, offering more services to a broad segment of Americans, particularly the low-income.
White House press secretary Jen Psaki said the “budget will reflect that [Biden] is going to continue to deliver on his priorities of … doing more work to get the pandemic under control, putting people back to work.”
She said the proposals, which some Republicans have decried as too costly, “will put us on better financial footing over time.”
The economy has improved since Biden became president, with the unemployment rate falling and growth picking up steam. But the White House has said much more needs to be done and called for more spending to provide access to things such as housing, educational programs and health initiatives.
This new spending would keep the budget deficit above $1 trillion for the rest of the decade. Even though Biden is proposing numerous tax increases and other changes that he has said would raise revenue, these measures would not be enough to wipe out the gap between spending and revenue through 2031.
The budget would expand nondefense discretionary spending by 16 percent, with some agencies seeing a huge increase. The Department of Health and Human Services, for example, would see its budget grow by 23 percent, and the Education Department’s would grow by 41 percent. Biden has said these agencies and others like them need more resources to help American families. This is a break from the Trump administration’s budget proposals, as they often tried to cut domestic agencies and argue that government funding crowded out private investment and led to waste.
The first months of Biden’s presidency have included numerous spending proposals, and one major piece of legislation that is already affecting the economy. Congressional Republicans largely abstained from their pledges to cut the budget during the Trump administration, but they have renewed their austerity calls in recent months. They have accused Biden of trying to spend too much too fast. Some Republicans have alleged that government spending is fueling inflation and hurting the economy. Republicans also attacked Biden’s budget plan for allowing many of the tax cuts for lower-income Americans in their 2017 tax law to expire in the middle of the decade.
“This is the latest example of President Biden abandoning his lofty promise that he can fund trillions of dollars in new spending simply by taxing the wealthy or corporations alone,” Republicans on the House Ways and Means Committee said in a statement. “In fact, President Biden’s budget relies on expiration of middle-class tax cuts in order to achieve a historically high level of tax on Americans.”
But Biden and his top aides have not backed down from the commitment to expand federal programs, even after signing a $1.9 trillion stimulus package in March that included expanded jobless aid and stimulus checks, among other things.
That law was just the beginning of Biden’s proposed spending plan. He has said this assistance is needed to help rebuild the economy from the devastating shock of the pandemic and what he has alleged was years of neglect of the middle class and lower-income families. He has already offered plans for infrastructure, and families and jobs. What makes this budget different, however, is that it is devoted to the broad financing of government operations. Without a budget deal by October, there would be a partial government shutdown. So this package is expected to kick off negotiations with lawmakers about how to proceed on issues from military funding to school programs.
The White House budget projects the U.S. economy will grow by about 5 percent in 2021, a very fast rate as the country rebounds from the coronavirus pandemic.
Then it projects that the economy will grow at a slightly slower but still healthy 4.3 percent clip next year before leveling off around 2 percent for the rest of the decade.
The budget deficit, meanwhile, would go from 16.7 percent of gross domestic product in 2021 to 7.8 percent in 2022.
The amount of outstanding federal debt would be larger than the entire U.S. economy throughout the rest of the decade, hitting 116 percent of GDP in 2027. Taxes are projected to increase by more than $3 trillion over the decade, in line with what the president has proposed as part of his economic programs.
The overall spending and deficit figures were first reported by the New York Times. The Washington Post reported last week that the Biden budget proposal would mirror what has already been proposed. In other words, Biden has decided to hold back on some of his other campaign promises, such as a public health-care option or sweeping prescription drug overhauls, as he tries to negotiate an infrastructure package with lawmakers.
The new budget will include calling on Congress to create a public health-care option and give Americans older than 60 the option to enroll in Medicare, according to a document obtained by The Washington Post, but does not advance specific policies for doing so and is not incorporated into the cost of the budget itself.
The White House offers a budget early each year that maps out its request for funding in the fiscal year that begins in October. The government’s budget consists of multiple parts. There are segments of the budget, known as discretionary spending, that must be renewed by Congress each year. They include money for the military, Education Department and a range of other programs. This often consists of nearly $1.5 trillion of spending, but it doesn’t account for the majority of the budget.
Most government spending is in another category, called “mandatory spending,” which includes money that is largely on autopilot and doesn’t need congressional reauthorization. This includes many large government expenditures such as Social Security, Medicare, Medicaid and safety-net programs. Changing these programs requires congressional approval, otherwise they typically continue running under the same rules.
Biden has already signaled to Republicans, though, that he wants to negotiate on many of his proposals, potentially making the budget just a blueprint for talks. On Thursday morning, some Senate Republicans extended a new infrastructure offer to the White House. And even though both sides remain far apart in terms of spending levels and how they would finance the changes, Biden has made encouraging comments about reaching a deal and made an effort to hold talks with numerous members. These talks will likely continue, though some Democrats have tried to warn the White House not to trust Republicans to ultimately cut a deal.