Home Posts The Biden Budget Proposal Outlines Social Spending And Tax Increases For Businesses
The Biden Budget Proposal Outlines Social Spending And Tax Increases For Businesses
Joe Biden

The Biden Budget Proposal Outlines Social Spending And Tax Increases For Businesses

WASHINGTON (AP) — President Joe Biden's $6 trillion budget proposal for next year would result in a $1.8 trillion federal government deficit, despite a slew of new corporate and high-income tax increases aimed at funding his ambitious spending plans.

Biden had already announced his major budget initiatives, but on Friday he will release them as a single proposal to incorporate them into the government's existing budget framework, including Social Security and Medicare, providing a more complete picture of the administration's fiscal posture.

Democratic aides revealed key details of Biden's plan, speaking on the condition of anonymity because the document has not yet been made public.

The massive deficit projections reflect a government whose steadily increasing pile of debt has topped $28 trillion, despite more than $5 trillion in COVID-19 relief; the government's structural deficit remains unchecked, and Biden uses tax increases on businesses and the wealthy to fund massive new social programs such as universal prekindergarten and large child care subsidies.

The budget incorporates the administration's $2.3 trillion infrastructure proposal and its $1.8 trillion American Families Plan, as well as details on his $1.5 trillion request for annual operating appropriations for the Pentagon and domestic agencies.

It is certain to provide Republicans with new fodder for their criticisms of the new Democratic administration as bent on a “tax and spend” agenda, resulting in deficits that would harm the economy and impose a crushing debt burden on younger Americans. However, huge deficits have yet to drive up interest rates, as many fiscal hawks predicted, and anti-deficit sentiment among Democrats has mostly vowed to remain muted.

“Now is the time to build (upon) the foundation that we’ve laid to make bold investments in our families, communities, and nation,” Biden said Thursday in Cleveland, touting his economic plans. “We know from history that these kinds of investments raise both the floor and the ceiling over the economy for everyone.”

The unusual timing of the budget release — on the Friday afternoon before Memorial Day weekend — suggests that the White House is hesitant to publicize the bad deficit news. Normally, lawmakers hold a round of budget hearings right away, but those will have to wait until Congress returns from a weeklong recess.

Under Biden's plan, the public debt would exceed the size of the economy and soon surpass record levels of debt relative to GDP that have stood since World War II, despite more than $3 trillion in proposed tax increases over the decade, including an increase in the corporate tax rate from 21% to 28%, increased capital gains rates on top earners, and the return of the alternative minimum tax.

Biden's plan, like all presidential budgets, is merely a proposal; it is up to Congress to implement it through tax and spending legislation and annual agency budget bills. With Democrats in control of Capitol Hill, albeit just barely, the president has the ability to implement many of his tax and spending plans, though his hopes for awarding larger budget increases to domestic agencies than promised foe

The Biden plan comes as the White House seeks an agreement with Senate Republicans on infrastructure spending, raising the possibility that he will have to go it alone and pass his plans with the support of his narrow Democratic majorities in both the House and Senate.

A flood of new spending includes $200 billion over ten years to provide free preschool to all three and four-year-olds and $109 billion to provide two years of free community college to all Americans, as well as $225 billion to subsidize child care, allowing many to pay a maximum of 7% of their income for all children under the age of five, and another $225 billion over the next decade to create a national family resiliency program.

It also calls for a significant increase in Title I, a federal funding program for schools with high concentrations of low-income students, with the proposal providing $36.5 billion for the program, a $20 billion increase over current levels. The new funding would be used to increase teacher pay, expand access to preschool, reduce educational inequities, and increase access to rigorous coursework, according to the proposal.

Such increases would increase federal spending to approximately 25% of GDP, while tax increases would result in revenues approaching 20% of GDP once implemented.

The $3.1 trillion budget deficit under President Donald Trump last year was more than double the previous record, as the coronavirus pandemic reduced revenues while increasing spending.

Speaking from Air Force One, White House press secretary Jen Psaki stated that Biden inherited deficits that had already been inflated by COVID-19 relief and promised that the administration's initiatives would "put us on better financial footing over time."

And the Biden campaign says public opinion is on its side, citing recent polls showing that the public supports ideas like increasing spending on roads and bridges and improving broadband, as well as raising taxes on corporations and the wealthy.

“The President’s Jobs Plan and Families Plan are once-in-a-generation investments in our economy, and they lay out a blue collar blueprint to ensure that prosperity is shared by all Americans,” said longtime Biden adviser Mike Donilon in a statement.

Republicans were appalled by Biden's budget figures.

“So far, this administration has recommended that we spend $7 trillion more this year, which is more than we spent in adjusted inflation dollars to win World War II,” Senate Republican Leader Mitch McConnell said Thursday on CNBC.

According to Biden's budget, the economy will grow by 5.2% this year, 4.3% the following year, and then settle at around 2% growth thereafter.

Collin Binkley, an AP Education Writer, helped with this report.

Leave a Reply

Your email address will not be published, Required fields are marked with *.