The White House on Friday unveiled a $6 trillion budget proposal for next year that adds to the nation's ballooning debt as President Biden pushes a sweeping economic agenda to dramatically expand the government-funded social safety net.
The fiscal 2022 budget request – the first of Biden's presidency – tallies up the administration's eight-year, $2.3 trillion American Jobs Plan and the $1.8 trillion American Families Plan and incorporates them into Biden's $1.5 trillion request for annual operating expenditures, which includes the Pentagon and other federal agencies.
The proposal – which will push debt levels held by the public to the highest levels since World War II in 2024 – will likely give fresh fodder to Republicans who have criticized the size and scope of Biden's spending proposals. Under the plan, the deficit would hit $1.8 trillion in 2022 and would routinely run above $1.3 trillion over the next decade, despite nearly $3 trillion in proposed tax increases. The gap between what the government spends and what it collects in revenue would grow to nearly $1.6 trillion by 2031.
Total debt held by the public would more than exceed the annual value of the entire economy by 117% in 2031, the highest level in close to a century.
Biden is pushing to raise the corporate tax rate to 28% from 21%, nearly double the capital gains tax rate paid by wealthy Americans, restore the top individual income tax rate to 39.6% and impose a global minimum on U.S. companies foreign profits as part of his two-pronged economic agenda.
"Now is the time to build the foundation that we’ve laid, to make bold investments in our families, in our communities, in our nation," Biden said in Cleveland on Thursday. "We know from history that these kinds of investments raise both the floor and the ceiling of an economy for everybody."
Still, the budget is merely a proposal – whether or not it's ultimately implemented hinges on Congress. Republican lawmakers have balked at the scale of Biden's spending plans and have unified to protect the 2017 tax law from any potential rollbacks. Some moderate Democrats have also raised concerns about Biden's proposed tax hikes, warning that higher rates could derail the nascent economic recovery from the coronavirus pandemic.
The Biden plan comes as the White House looks to strike a bipartisan deal with a group of moderate Senate Republicans on infrastructure. But administration officials criticized a $1 trillion proposal put forward by the GOP lawmakers on Thursday, saying they were concerned about pay-fors as well as the lack of funding for items such veterans' hospitals and elder care.
The White House had initially set a Memorial Day deadline for progress in the infrastructure talks, but said Thursday that negotiations will move into June.
With narrow majorities in the House and Senate, Democrats have the option to bypass Republicans and approve the measure on a party-line basis using a procedural tool known as budget reconciliation, a path that some liberals want to take. But Biden has maintained that he wants to secure a bipartisan agreement after Democrats passed the $1.9 trillion American Rescue Plan earlier this year without a single Republican vote.
Biden’s budget projects the economy will grow by 5.2% this year and 4.3% next year, before plateauing to about 1.9% growth in the following years.