President Joe Biden will unveil a $6 trillion budget proposal on Friday that would push federal spending to its highest sustained levels since World War II.
Biden’s budget plan asks the federal government to spend $6 trillion in the 2022 fiscal year and for total spending to hit $8.2 trillion by 2031, according to documents first obtained by The New York Times.
Should Biden’s budget be accepted by Congress, the federal government will spend more as a share of the economy each year than at any other time since World War II, with the exception of 2020 and 2021, which saw trillions in COVID-relief spending.
The two programs fueling the massive expenditures are Biden’s American Jobs Plan and American Families Plan, which aim to boost the nation’s infrastructure, such as highways, transit systems, and airports, as well as social safety net additions to housing, manufacturing, elder care, and other categories.
To finance his sweeping fiscal prescriptions, Biden intends to pass a massive hike in corporate taxes and income taxes on households making more than $400,000, though Biden vowed during his campaign not to raise taxes for individuals making more than $400,000. The tax on corporate income will be pushed from 21 to 28 percent under Biden’s spending project.
To generate more revenue for his payment plan, Biden has included alongside the Jobs Plan the Made in America Tax Plan, which authorizes the IRS to crack down on tax cheating and loopholes among high-income earners. Democratic Senator Elizabeth Warren recently introduced a similar proposal to dramatically increase the IRS’s budget for tax enforcement.
Despite Biden’s claims of the nation’s infrastructural decline, the evidence shows that the physical condition of interstate highways has improved in recent decades while America reports low commute times and fast broadband.
If Biden’s plans are implemented, the United States would run significant deficits as it borrows money to help fund them. The federal budget deficit would rise to $1.8 trillion in 2022, dropping slightly in the following years before increasing again to nearly $1.6 trillion by 2031.
The Congressional Budget Office recently concluded that both labor and capital taxes decrease GDP, the former by reducing the incentive to work and the latter by reducing the incentive to save and invest.
Under Biden’s program, total public debt would greatly surpass the annual value of GDP, expanding to 117 percent of the size of the economy in 2031. By 2024, debt as a share of the economy will reach the highest level in American history, exceeding its record under the New Deal during the World War II era.