Biden pushes $6 trillion budget, U.S. debt nears WWII record

President Joe Biden on Friday unveiled his fiscal year 2022 budget, his first proposal since taking office, totaling about $6 trillion.

The budget includes an eight-year, $2.3 trillion American Jobs program and $1.8 trillion American Family program, as well as $1.5 trillion in annual operating expenses, including funding for the Pentagon and other federal agencies.

Under the budget proposal, U.S. annual spending would reach $8.2 trillion by the end of 2031; the debt would exceed the record level at the end of World War II in 2024 and reach 117 percent of economic output by the end of 2031, the highest level of U.S. debt in nearly a century.

Biden’s first budget proposal is expected to give Republicans new fodder for criticism. Republicans have been criticizing Biden’s spending proposals as being too large in scale and scope.

White House: Biden’s plan is forward-looking Deficit can be made up by tax increases
According to the budget, the U.S. deficit would reach $1.8 trillion in 2022 and regularly exceed $1.3 trillion over the next decade, while the White House plans to raise taxes by close to three trillion dollars.

White House officials said the budget proposal would increase the deficit over the next decade, but the excess spending would eventually be offset by tax increases on the wealthy and corporations.

Biden proposed pushing to raise the corporate tax rate from 21 percent to 28 percent, nearly doubling the capital gains tax rate on wealthy Americans, restoring the top individual income tax rate to 39.6 percent and imposing the lowest tax rate in the world on foreign profits of U.S. companies.

These policy changes would reverse many of the tax cuts Republicans enacted in 2017.

Cecilia Rouse, chairwoman of Biden’s Council of Economic Advisers, said Friday that Biden’s plan is forward-looking and that the administration is willing to endure budget deficits with low interest rates and make significant investments in the nation’s economy. She expects the deficit to fall by more than $2 trillion over the next few years.

“The most important test of our fiscal health is the actual interest payments on the debt. It will tell us whether the debt is burdening our economy and crowding out other investments.” She said.

Biden’s budget plan is just lip service, and the actual budget needs congressional approval
Biden’s budget plan for fiscal year 2022 needs to be agreed to by Congress. While the budget needs only a simple majority to pass both houses of Congress, the actual spending bill needed to fund the government will require bipartisan support in the Senate.

Typically, the president’s budget proposal is an indication to Congress of what the White House wants to accomplish in the coming years; Congress will then ignore the White House’s budget request in favor of its own actual budget spending plan.

In each fiscal year, government funding is actually obtained through 12 appropriations or spending bills, each with a subject that corresponds to the appropriations committees of both houses of Congress, and finally these bills need to be passed by both houses of Congress and signed into law by the president.

Democrats in Congress have already welcomed Biden’s budget plan, saying it would fund long-overdue investments after years of spending restraint.

They agree with most of Biden’s proposals, but military spending has been an area of contention because some radical Democrats want to see it cut.

Republicans, on the other hand, are critical, saying the plan represents unwarranted federal intervention in the economy and risks spurring inflation and adding to the massive national debt.

Lindsey Graham (R-S.C.), the ranking Republican on the Senate Budget Committee, said, “The spending is outrageously large and dramatically increases non-defense spending and taxes. Over time, it will lead to a weak Department of Defense.”

Biden’s FY 2022 budget spending at a glance
Released Friday, Biden’s FY 2022 budget plan also forecasts the economy to grow 5.2 percent in FY 2021 and 3.2 percent in FY 2022. The annual growth rate will stabilize between 1.8 percent and 2 percent over the next few years.

At the same time, the White House also assumes that interest rates and inflation will remain low for the foreseeable future, but some economists and Republicans disagree with this forecast.

Specifically, Biden’s 2022 budget plans spending as follows.

American Jobs Program, $2.3 trillion.

The Families USA program, $1.8 trillion.

The School Plan, $36.5 billion; for Title I schools, which requires that children from low-income families account for at least 40 percent of enrollment. This plan represents a $20 billion increase over the 2021 enacted level.

Launch of the Advanced Research Projects Agency for Health (ARPA-H), $6.5 billion; to drive innovation in health research, initially focusing on diseases such as cancer, diabetes and Alzheimer’s disease.

Centers for Disease Control and Prevention (CDC), $8.7 billion.

Department of Health and Human Services (HHS), $10.7 billion, an increase of $3.9 billion over the 2021 enacted level.

Department of Veterans Affairs, $621 million for opioid prevention and treatment programs.