Money is cheap, let’s spend it – $ 6 trillion budget message from the White House
On Friday, the White House sent Congress a $ 6 trillion budget plan that would increase spending on infrastructure, education and climate change, saying it made fiscal sense to invest now , when the cost of borrowing is cheap, and reduce deficits later.
The first comprehensive budget proposed by Democratic President Joe Biden faces stiff opposition from Republican lawmakers, who want to cut U.S. government spending and reject plans to raise taxes on the rich and big business.
Biden’s plan for fiscal year 2022 calls for $ 6.01 trillion in spending and $ 4.17 trillion in revenue, a 36.6% increase from 2019 spending, before the coronavirus pandemic n ‘increases expenses. It projects a deficit of $ 1.84 trillion, a sharp decrease from the past two years due to the COVID-19 pandemic, but up from $ 984 billion in 2019.
The plan is based on a partial “skinny budget” released last month by the White House, which mapped $ 1.5 trillion in discretionary spending. Read more
The plan has drawn praise from Democrats, including House Speaker Nancy Pelosi, and critics from Republicans – who have criticized the proposed higher debt levels – and some progressive groups, who have said it should have cut military spending.
Senate Budget Committee Chairman Bernie Sanders called Biden’s budget “the most important program for working families in our country’s modern history,” and said it would create millions of dollars. well-paying jobs while reducing poverty.
Senate Majority Leader Mitch McConnell scorned the plan and warned Democrats to “move beyond socialist reverie and autonomous partisanship.”
“President Biden’s proposal would drown American families in debt, deficits and inflation,” McConnell said in a tweet.
PAID IN 15 YEARS
White House officials have said that Biden’s $ 4 trillion plans to tackle historic inequalities in the United States, climate opportunity and provide four more years of free public education will be fully paid in 15 years. tax increases starting to reduce deficits after 2030.
Cecilia Rouse, chairwoman of Biden’s Council of Economic Advisers, said Biden’s plan was loaded up front and the administration was prepared to live with budget deficits amid low interest rates to make cuts. significant investments in the country’s economy. She predicted a decline in deficits of more than $ 2 trillion in the following years.
“This is a radical departure from the unpaid tax cuts under the previous administration which seriously exacerbated our long-term fiscal problem,” she said. “The most important test of our fiscal health is paying real interest on debt. This is what tells us if debt is straining our economy and crowding out other investments.”
While rates on U.S. Treasuries soared to record levels at the height of the coronavirus crisis last year, the government’s borrowing costs are still at their lowest in years.
Rouse said the economy was experiencing short-term inflation spikes, fueled by strong growth in the economy, but projected it to stabilize at an annual rate of around 2% over time.
More investment would boost U.S. economic growth, with the current conservative White House forecast calling for gross domestic product growth of 2% in 2031, compared to the Federal Reserve’s estimate of 1.8%.
Biden’s first comprehensive look at spending since taking office in January serves as a budget plan for his political priorities and is likely to start months of difficult negotiations with Congress, which must approve most of the spending.
Much of the Republicans’ opposition is escalating to Biden’s willingness to spend more to revamp the U.S. economy, as they argue it could fuel inflation and reduce the competitiveness of businesses.
Biden has argued with Republicans over the price of his initiatives, recovering from the pandemic and improving roads and bridges. No Republican voted for his $ 1.9 trillion stimulus bill, but some touted its benefits later, drawing scolding from the president. Read more
US Treasury Secretary Janet Yellen said on Thursday the budget would push US debt above the size of the US economy but not contribute to inflationary pressures. Read more
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