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 in the years ahead, 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, more than the debt-to-GDP ratio of the World War II era. And by 2031, interest on the debt all by itself would cost almost $914 trillion — more than the federal government spends now on the military or education.
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 without those two plans. 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 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.
The president’s budget request for the Pentagon is $715 billion, a 1.6% increase over the current budget. Included in that is a $5.1 billion enhancement of the Pacific Deterrence Initiative meant to maintain the United States’ edge over China, which Defense Secretary Lloyd Austin calls the department’s “pacing challenge.” The Pentagon budget request includes $617 million in new investments to tackle climate change. It also requests more funding for COVID-19 and pandemic response activities, like 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 of what the budget should look like in the weeks and months ahead. 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. 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 more expansive.
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 from consideration when it became clear she lacked sufficient support in the Senate.
Budget hawks immediately expressed concerns that Mr. Biden’s budget will add to the deficit and debt.
“The budget proposes $5 trillion of spending and tax breaks and only pays for three-quarters of the cost, leaving nearly $1.4 trillion of higher debt,” Committee for a Responsible Federal Budget President Maya MacGuineas said in a statement. “Debt under the budget would hit new records almost every year. Furthermore, before we enact trillions of dollars in new initiatives, we need a plan to finance or cut back what we’ve already committed to. Any comprehensive plan to invest in the future must address our unsustainable fiscal outlook. We should work to leave our children a strong economy and a sound budget, not a mountain of debt.”
Congress has until the end of September to pass 12 appropriations or spending bills before government funding runs out.
— CBS News’ Ellee Watson contributed to this report.