Biden to say budget will trim $1T over next decade
WASHINGTON – President Joe Biden intends to propose a spending plan for the 2023 budget year that would cut projected deficits by more than $1 trillion over the next decade, according to a fact sheet released Saturday by the White House budget office.
In his proposal expected Monday, the lower deficits reflect the economy’s resurgence as the United States emerges from the pandemic, as well as likely tax law changes would raise more than enough revenue to offset additional spending planned by the Biden administration. It’s a sign the government’s balance sheet will improve after a historic burst of spending to fight the coronavirus.
The fading of the pandemic and the growth has enabled the deficit to fall from $3.1 trillion in fiscal 2020 to $2.8 trillion last year and a projected $1.4 trillion this year. That deficit spending paid dividends in the form of the economy expanding at a 5.7% pace last year, the strongest growth since 1984. But inflation at a 40-year high also accompanied those robust gains as high prices have weighed on Biden’s popularity.
For the Biden administration, the proposal for the budget year that begins Oct. 1 showed the burst of spending helped to fuel growth and put government finances in a more stable place for years to come as a result. One White House official, insisting on anonymity because the budget has yet to be released, said the proposal showed Democrats can deliver on what Republicans have promised before without much success: faster growth and falling deficits.
But Republican lawmakers have said that the Biden administration’s spending has led to greater economic pain in the form of higher prices. The inflation that came with reopening the U.S. economy as the closures from the pandemic began to end has been amplified by supply chain issues, low interest rates and, now, disruptions in the oil
and natural gas markets because of Russia’s invasion of Ukraine.
Senate Republican leader Mitch Mcconnell of Kentucky pinned the blame solely on Biden’s coronavirus relief, as well as his push to move away from fossil fuels.
“Washington Democrats’ response to these hardships has been as misguided as the war on American energy and runaway spending that helped create them,” Mcconnell said last week. “The Biden administration seems to be willing to try anything but walking back their own disastrous economic policies.”
Biden inherited from the Trump administration a budget deficit that was equal in size to 14.9% of the U.S. economy. But the deficit starting in the upcoming budget year will be below 5% of the economy, putting the country on a more sustainable path, according to people familiar with the budget proposal who insisted on anonymity to discuss forthcoming details.
The planned deficit reduction is relative to current law, which assumes that some of the 2017 tax cuts signed into law by Trump will expire after 2025. The lower deficit totals will also be easier to manage even if interest rates rise. Still, Biden’s is offering a blueprint for spending and taxes that will be decided by Congress and could vary from the president’s intentions.