February 28, 2024

WASHINGTON – President Joe Biden released his fiscal 2022 budget proposal to Congress on Friday, the first formal budget of his presidency and a sharp move away from his predecessor Donald Trump.

Biden’s budget includes his two domestic signature proposals, the American Families Plan and the American Jobs Plan, neither of which have yet been seriously debated by Congress.

It also shows how different Biden’s priorities are from Trump’s. For example, requests are made for a 41% year-over-year increase for the Ministry of Education, 23% for the Ministry of Health and Human Services and 22% for the Environmental Protection Agency.

Funds for the Department of Homeland Security, which implemented Trump’s aggressive immigration policy, would decrease by a tenth of a percent. Another priority for Trump, the Department of Defense, would be to increase funding by just 2%.

On a personal level, Biden sees his budget as a reflection of his values. He often quotes his own father as saying, “Don’t tell me what you value. Show me your budget and I will tell you what you value.”

The total budget request for 2022 is $ 6 trillion. However, only $ 300 billion of that is required for the next year. Instead, as in any presidential budget, the vast majority of the money it contains is spent on programs that the government is legally obliged to fund, such as: B. Medicare, Social Security, and Interest on National Debt.

In total, around $ 1.5 trillion was requested for discretionary space in fiscal 2022, including funding from all federal agencies. About half of this is already earmarked for the Ministry of Defense.

On the pay side, Biden’s budget includes a variety of changes to tax law that the White House claims can fund its multi-billion dollar domestic spending plans. These include, above all, an increase in the corporate tax rate from 21% to 28% as well as increased enforcement of the IRS and higher taxes for the richest taxpayers.

The tax changes also include a number of “Made in America” ​​tax changes that penalize US companies for offshoring jobs, particularly those producing goods that are then bought back to American consumers.

As with most of the President’s budget plans, the White House relies on optimistic projections of low unemployment and low inflation rates to enable the cast, which Biden’s spending plans will amortize through higher growth.

Unemployment, according to the White House, will fall to 4.7% by the end of the year, to 4.1% in 2022 and to 3.8% the following year. It is then assumed that unemployment will remain at a very low 3.8% for the next seven years.

Also in the White House budget is a forecast that inflation will be 2.1% this year and will not be more than 2.3% a year for the next 10 years.

Numbers this low are hard to justify, however: the current unemployment rate is 6.1% and the current inflation rate is 4.2%, well above the White House estimate.

Jared Bernstein, a member of the President’s Council of Economic Advisers, acknowledged the problem with the inflation forecast in an interview on CNBC’s closing bell on Friday.

Bernstein said the economic projections for the budget were made in February of this year when inflation rates were still low. If they were written now, they would take into account the higher inflation rates.

Cecilia Rouse, chair of the Biden Council of Economic Advisers, spoke to reporters ahead of the plan’s release on Friday that historically low interest rates are now an ideal time for the federal government to borrow additional debt to modernize the economy and expand into the social Safety net.

Shalanda Young, acting director of OMB, said interest rates will rise slightly over time, but believes they will remain comparatively low thanks to “a global, ongoing phenomenon” of lower interest rates.

The White House believes that over time, Biden’s proposals would increase productivity and consumer spending to the point that they would pay for themselves and eventually reduce the deficit in 15 years.

Biden’s budget has already been scrutinized by some progressives who find it does not include a public option for healthcare, which was one of Biden’s election promises.

White House officials said Biden would instead turn to Congress to help create a public option and pass a law that would allow Medicare to negotiate drug prices with drug companies.

Like all presidential budgets, Biden consists of a part of a plan and a part of a wish-list to illustrate the president’s political priorities as well as informing the appropriators of Congress.

Depending on Congress, to actually get into law, Biden’s budget will likely be changed in large and small ways before it is finally approved by Congress. With the Democrats in control of both houses this year, Biden stands a far better chance of his top priorities being reflected in the bottom line than most of his recent predecessors.

In a budget release statement, the President said the document was “a budget for what our economy can be, who our economy can serve and how we can better rebuild it by meeting needs, goals, ingenuity and.” make the demands. ” Strength of the American Popular Front and Center. “

You can read the President’s full budget here.