President Joe Biden hasn’t shied away from proposing robust spending in his first budget that totals $6 trillion over the next year.
We see this an initial volley in negotiating with Republicans in the House and Senate with the final budget being significantly lower.
The biggest problem now is the budget projects a $1 trillion deficit each year for the next 10 years. New spending will exceed new revenue for a decade. That’s not only bad economic policy, it’s bad political policy. Republicans can easily swat back this first volley as typical “tax and spend” Democrats and will have a lot of Americans agreeing with them.
The budget nonpartisan watchdog group the Concord Coalition says the deficits will grow from 110 percent to 117 percent of the economy. The group notes it’s the first budget in more than a decade without a goal of reducing total deficits or the debt-to-GDP ratio. The group says it’s disappointed in the budget and while it supports Biden’s aim to eventually reduce deficits longer term, a decade is too long to wait.
We support that position as well, but also concur with the coalition that this also is not the time for austerity and there can be a case made to revisit the 2017 tax cuts that ballooned the deficit by nearly $2 trillion. Those Republican-approved cuts have mostly not delivered expected revenue and GDP growth projections of 3 percent.
Biden’s budget increases spending by 16 percent on domestic programs but only 1.7 percent for defense programs. That’s an imbalance that’s not likely going to receive the support of even some Democrats. The reliance on debt also means the federal government will have to borrow 50 cents of every dollar it spends this year. That’s another statistic that is likely to draw sticker shock from most families who don’t come close to that kind of borrowing.
But Biden’s budget is filled with new proposals for child care and elder care, for subsidizing health insurance and other safety net programs that will cost some $1.8 trillion. The administration argues these are the things Biden said he would do amounting to adding jobs and supporting the economy from the middle class out.
The Concord Coalition gives Biden credit for having a plan to pay for all the new spending with higher taxes on the wealthy and corporations. And the proposed $2.3 trillion infrastructure plan is long overdue. Underfunding of roads and bridges for years mean those things will now be double or triple the price had we acted years ago.
And Republicans will not be getting the deficit hawk badges when Democrats bring up the 2017 GOP tax cuts that increased the deficit by $2 trillion.
Biden has been a student of federal budgets for his 40-plus-year tenure in Congress and the White House. He knows the opening volley should be big to eventually get something that’s reasonable.
And that’s the ultimate goal, including getting the deficit to go down in the next 10 years, not up.