Some highlights from the debate over President Biden’s budget proposal:
This budget is meant to challenge 40 years of Reaganomics: “The budget is built around a fundamental understanding of how our economy works and why, for too long and for too many, it has not,” President Biden says in an introductory message to his budget request. “It is a budget that reflects the fact that trickle-down economics has never worked, and that the best way to grow our economy is not from the top down, but from the bottom up and the middle out.”
"Overall, the Budget represents a comprehensive strategy to build an economy that works for everyone, not only the wealthy and well-connected,” the budget document says. “These investments would pay dividends for decades to come and would help build a high-skilled workforce, spur faster growth, and create more jobs, higher wages, more security, less poverty, less racial inequity, and broader prosperity.”
At a time when interest rates are low: The budget says that low interest rates create an opportunity: "In the current economic environment, the Federal Government has the fiscal space to make critical investments to expand the productive capacity of the economy, while also keeping real interest cost burdens low by historical standards. In fact, failing to make investments now that support growth and shared prosperity would leave future generations worse off."
With the aim of transforming the economy: “With critical investments in job creation, clean energy, infrastructure, education, child care, public health, and more this budget will bring our country into the 21st century and ensure every family has the opportunity to succeed,” says House Budget Committee Chair John Yarmuth (D-KY). “For too long, self-inflicted austerity has been mistaken for fiscal responsibility, to the detriment of American families and our nation’s economy. The Biden budget ends this era of chronic underinvestment in America’s potential, and addresses deficits in our communities that have been exposed and exacerbated by the pandemic.”
Including a historic decrease in poverty: “Having followed Presidents’ budgets for >40 years, I think it’s fair to say that while I might modify some things in the new Biden budget, it would, if enacted, do more to reduce poverty and inequality than any other budget in modern US history,” says Robert Greenstein of the Brookings Institution, who founded the Center on Budget and Policy Priorities.
The White House says it’s fiscally responsible: “A budget that added to long-term deficits would worsen fiscal health, while a budget that reduced deficits today by underinvesting in the American people would result in slower, more stratified growth that would cause more damage than one that invests appropriately,” the White House says in a fact sheet accompanying the budget. “The president’s budget responsibly balances these needs and risks by charting an economically and fiscally sound course for the near term and the long term.”
But there are worries about more deficits and debt: “We are encouraged that the President continues to offer concrete proposals to pay for his legislative agenda over time, and we strongly support the administration’s insistence on offsetting new spending," the Committee for a Responsible Federal Budget says. Yet the President’s budget takes too long to pay for his initiatives and does little to address our high and rising debt, lower health care costs, or secure major trust funds headed toward insolvency.”
And questions of political will: “This proposal includes significant temporary spending within 10 years that’s paid for over 15 years with permanent revenues,” says Michael Peterson, CEO of the Peter G. Peterson Foundation, which advocates for deficit and debt reduction. “While this certainly projects out more favorably than pure deficit spending, in the end it will only be as fiscally responsible as our future fortitude to actually stop the spending and continue the revenues.” (The Fiscal Times is an editorially independent news service funded separately by Peterson.)
The budget doesn’t factor in lots of future spending and debt: “These staggering figures do not even represent the entire Biden agenda,” Brian Riedl, a senior fellow at the conservative Manhattan Institute think tank, writes in the New York Post:
“They account only for the recently-enacted ‘stimulus,’ a massive discretionary spending hike, and the trillions in (creatively-defined) ‘infrastructure’ spending proposed by the President over the past two months. However, during last fall’s campaign, Biden also proposed trillions in new spending for health care, Social Security, Supplemental Security Income, climate change, college aid, and other priorities. The White House has signaled that these new spending initiatives are still in the pipeline.
"Including these forthcoming proposals, the President would push spending and deficits far above any levels that have ever been sustained. The national debt — which was just under $17 trillion before the pandemic — would exceed $44 trillion a decade from now.”
Republicans will oppose tax increases: “I continue to disagree with the Administration’s bids to pay for budget-busting spending with job-killing tax hikes,” says Senate Finance Committee Ranking Member Mike Crapo (R-ID). “This colossal $6 trillion proposal includes tax increases that will inevitably hurt all Americans and businesses, not just a slim minority of individuals. ... At a time when the U.S. should be maximizing economic growth and providing an environment for job creation to reach pre-pandemic levels, the Administration is putting forth proposals that will do the opposite.”
And a key Republican says Biden’s budget is DOA: “President Biden’s budget is dead on arrival – just like all other presidential budgets,” says Sen. Lindsey Graham (R-SC), the ranking member of the Senate Budget Committee. “It is insanely expensive. It dramatically increases nondefense spending and taxes. Over time it will result in a weakened Department of Defense. There will be serious discussions about government funding. But the Biden budget isn’t serious and it won’t be a part of those discussions.”
But Democrats are already preparing to pass the budget on their own: “I look forward to working with the Administration and my colleagues to write and to pass a reconciliation package that builds upon President Biden’s proposal as soon as possible,” says Sen. Bernie Sanders (I-VT), the chairman of the Senate Budget Committee. “As a first step in that process, the Budget Committee will soon be holding a hearing on the President’s budget.”