President Joe Biden's first budget proposal will hike federal spending to new highs and would rely on near-record levels of borrowing even as the economy recovers from the COVID-19 pandemic.
That's according to The New York Times, which got an early look at some details of Biden's $6 trillion budget proposal. The White House is set to unveil its official spending plan for the next fiscal year on Friday. The Times reports that Biden's proposal would result in "the highest sustained levels of federal spending since World War II," with the budget growing to $8.2 trillion by 2031—the end of the 10-year window that's typically included in presidential budget-making.
The specific numbers are new, but no one should be surprised by the trajectory. Since taking office in January, Biden has proposed roughly $6 trillion in new government spending (spread out over multiple fiscal years) via his American Recovery Plan, his American Families Plan, and his American Jobs Plan.
Biden has called for hiking taxes on high earners and corporations, though the Times makes it clear that those increases won't be nearly enough to cover the cost of everything the White House wants to do.
The Times' Jim Tankersley notes that Biden's plan would see the federal government spend "what amounts to nearly a quarter of the nation's total economic output every year over the course of the next decade"—a threshold that has never been hit since World War II, with the exception of 2020 and 2021—while also collecting "tax revenues equal to just under one-fifth of the total economy," which would also near a record high.
That really sums it up. Record levels of spending that would well exceed even a historically high share of the economy devoted to funding the government.
While Biden's proposal does not envision budget deficits rising as high as they did last year—when the government spent $3.1 trillion more than it collected in tax revenue—his budget calls for deficits of at least $1.6 trillion for the foreseeable future, the Times reports. The national debt measured as a share of the economy's overall size will exceed the all-time record high of 113 percent, set during World War II, by 2024. And it will keep growing.
Even without the added worry of the rising deficit, Biden's proposed increase to the baseline level of annual federal spending is staggering on its own. During 2019, the last full fiscal year before the COVID-19 pandemic, the federal government spent about $4.4 trillion. Biden's proposal rings in at $1.6 trillion above that.
The current Congressional Budget Office (CBO) baseline envisions just a hair over $5 trillion in spending during the current fiscal year, and it does not see federal spending exceeding $6 trillion until 2027. Biden's plan takes the country to that level next year.
That same CBO report projected the annual budget deficit to fall to just over $1 trillion by 2024 before rising slightly over the rest of the decade. The passage of the $1.9 trillion American Rescue Plan in March has already nudged those numbers higher, and Biden's budget makes it clear that the days of mere trillion-dollar deficits are gone.
Like all presidential budgets, Biden's is mostly aspirational; Congress will have the final say. But with Democratic majorities in both chambers, something similar to the president's proposal is likely to be adopted.
After Republicans effectively traded away any claim to fiscal responsibility during the Trump administration by backing bigger budgets and higher deficits, Biden rode into office with the chance to spend big with fewer of the usual political impediments. In his joint address to Congress last month, Biden promised to build "a union more perfect, more prosperous, and more just."
Apparently it will also require more spending, more taxes, and more borrowing.
No comments:
Post a Comment