President Biden’s sprawling $6.4 trillion budget released on Thursday is best viewed as a political messaging exercise. With Republicans in control of the House of Representatives, the proposal was dead even before arrival. But the annual ritual of the president delivering a budget request to Congress was a useful opportunity for Biden to stake out ground in the bitter standoff over next year’s spending levels and the raising of the debt ceiling.
Biden’s purpose is to advance the notion that our fiscal problems could be solved by a willingness to let the very wealthy pay just a little bit more — and to accuse Republicans of holding the country hostage to protect tax cuts for the rich. Unless Republicans can overcome their internal divisions and offer a serious alternative, such a strategy just might work politically.
However, were we to judge Biden’s proposal as an actual effort in addressing U.S. fiscal problems, it would be an abject failure. The top-line numbers are that Biden’s proposal would raise taxes by $5.5 trillion and boost spending by $2.2 trillion over the next decade, as compared with the Congressional Budget Office baseline. While Biden claims $3 trillion in deficit reduction, this is measured against a baseline that was already inflated by the first two years of extravagant Biden spending. In February 2021, just after Biden was sworn in, CBO projected deficits of $14.5 trillion from 2021 to 2031. If adopted, the Biden policies would produce deficits of $18.9 trillion over the same period.
In 2019, the year before the pandemic hit, annual spending was $4.4 trillion. Biden is trying to make yearly budgets of above $6 trillion the new normal, and then build on them. The White House projects that the budget for the year 2033 alone will blow past $10 trillion.
More specifically, Biden’s budget is a familiar collection of left-wing tax and spending policies, many of which were too radical to pass even when Democrats had full control of Congress. Biden wants to not only hike corporate taxes, but move toward a global tax scheme in hopes of pressuring foreign countries to raise their taxes to limit the exodus of companies from the U.S. He proposes to raise the top marginal income-tax rate back to nearly 40 percent while increasing taxes on capital gains. He would raise to 5 percent a surtax on investment income originally intended to finance Obamacare and claim it as a new plan to shore up Medicare. The tax would also be expanded to impact small businesses.
The Biden proposal also includes left-wing wish-list items on health care, housing, and “environmental justice.” When Obamacare was passed, its raft of regulations drove up the price of insurance, making it unaffordable to those who didn’t qualify for subsidies. Under Biden, the Democratic Congress voted twice to temporarily expand the subsidies, and the budget would make those enhanced subsidies permanent. Biden also wants to expand Medicaid as well as offer new or expanded subsidies for child care, housing, community college, and clean energy.
To put the Biden budget in perspective, the only time U.S. debt has ever exceeded the size of the economy for two consecutive years was during World War II. In the Biden budget, according to the White House’s own estimates, U.S. debt would eclipse 100 percent of GDP in every single year of the ten-year projection period (2024–33). It is deeply ironic that as Biden defends his unconstitutional actions to deliver hundreds of billions of dollars of student-debt forgiveness by executive fiat, he is perfectly content to leave the same generation with an unprecedented and unsustainable debt burden.