From the Government and Here to Help: The Biden Budget Proposal
By: Ian Connor Linnabary, Blog Contributor
On the Friday before memorial day, President Biden debuted his budget proposal for the 2022 fiscal year. In total, the budget will cost the American taxpayers an astronomical six trillion dollars in 2022, costing up to eight trillion dollars in the subsequent ten years. This new budget would put our annual deficit far over a trillion dollars during that time as well. Debt as a share of the economy would also rise to 117% of GDP, greater than the period following WWII. Within this budget, there is 1.52 trillion dollars left in discretionary spending which is an 8.4% increase from the 2021 fiscal year budget.
The levels of deficit spending laid out in the budget are some of the most astronomical we have seen. To add insult to injury, the President is asking the American people — the ones who finance this spending — to ignore it under the guise of the government leading America into a new age of prosperity. Experience has taught us that the private sector paves the path to society’s development better than the public sector ever could. Making the government outlay a quarter of the economy and crowd out the private sector has never been an effective way of creating sustainable prosperity.
This budget, like almost all budget proposals, won’t look the same when it’s passed by Congress, but we can still expect astronomical amounts of spending. Budgets like this are more or so a statement of the Executive branch’s priorities and vision for the Federal government in terms of fiscal policy, which every American should care about. To try and pay for this budget, the President would raise taxes in several areas. The corporate tax rate would rise to 28% from its current 21%, and the capital gains tax would almost double going to 43.4% from 23.8%. Unrealized capital gains would be taxed to death with a one million dollar per person exemption. In an attempt to increase revenues, the Biden administration also proposes expanding the IRS and nearly doubling its total staffing in an attempt to bring in an extra 700 billion dollars in revenue.
Given that we the people are the ones financing this spending, it is important that we know what is in the budget. In total it allocates a generous 132 billion dollars for the Department of Health and Human Services. It is an increase of 25 billion dollars from fiscal year 2021, with requests 8.7 billion dollars allocated to the Centers for Disease Control and Prevention. One notable item that was left out of the White House’s budget proposal is the Hyde Amendment, which is a bar on federal spending for abortions. The President was in support of the Hyde Amendment until the 2020 Presidential campaign where his position switched to match the more progressive wing of his party.
The budget proposal makes a big investment in the fight against climate change, with 36 billion dollars being allocated to fight climate change. There is also a 171 billion dollar fund that goes towards the research and development of alternative energies to fossil fuels for the transportation and industrial sector. The EPA, the primary federal environmental and climate regulator would see a massive budget increase of 21% percent, at 11.2 billion dollars. A final 10 billion dollars would go towards improving the Department of Energy labs that research clean energy.
The Biden budget does not leave defense hanging, with 715 billion dollars being allocated to the Pentagon budget. Digging deeper we see that the Army received a five billion dollar cut, while the Air Force and Navy/Marine Corps saw a slight increase. This reflects the Biden administration’s priority of combatting China and Russia. The budget also includes 5.1 billion dollars for the Pacific Deterrence Initiative (PDI). The expressed goal of this inactive is to “ enhance U.S. presence in the region by positioning U.S. capabilities to allow timely response to adversarial threats, strengthen the capability of U.S. forces and regional allies and partners, and meet objectives under the National Defense Strategy.”
This Budget includes measures from many of Biden’s signature policy proposals like the American Jobs Plan and American Families Plan. From the American Jobs Plan, there are funds set aside to repair roads, bridges, and highways, but also investments in what the Whitehouse calls ``Human Infrastructure” such as Universal pre-k and community college. From the American Families Plan, there is a plan to have the government fund 4 additional years of schooling, including free preschool and two years of community college. This is a major move by the White House that further cements the Government’s place in the life of our students. In total this would cost a hefty 34 trillion dollars a year.
This budget is massive, and the items above don’t even begin to scratch the surface of it. We cannot continue to act as if Federal dollars are just free dollars, and that we can deficit spend to our heart’s content. Deficit spending has real and lasting consequences that go beyond the short term. Even liberal economists like Larry Summers, who served in both the Obama and Clinton White Houses, are warning of the detrimental effects of deficit spending like this. The Congressional Budget Office has already said that we could see an increase in interest rates and a decrease in business investment due to the crowding out caused by this spending. Unexpected inflation and other effects of that nature are surely to be expected as well if spending like this occurs. For these reasons and more, it is past time to demand fiscal responsibility from our leaders in Washington.