Biden budget: President sets out $6tn spending plan

President Joe Biden speaks to Congress — image captionMr Biden will need Congress to pass his plan before it becomes law

US President Joe Biden has released his first annual budget – a $6tn (£4.2tn) spending plan that includes steep tax increases for wealthier Americans.

The bumper proposal would include huge new social programmes and investment in the fight against climate change.

But it needs approval from Congress, where Republican Senator Lindsey Graham condemned it as “insanely expensive”.

Under the plan, debt would reach 117% of GDP by 2031, surpassing levels during World War Two.

That would be in spite of at least $3tn in proposed tax increases on corporations, capital gains and the top income tax bracket.

Former President Donald Trump, a Republican, also ran up the deficit each year he was in office, and his final annual spending proposal had a price tag of $4.8tn.

The Biden budget includes a $1.5tn request for operating expenditures for the Pentagon and other government departments. It also incorporates two plans he has previously publicised: his $2.3tn jobs plan and a $1.8tn families plan.

Mr Biden, a Democrat, said his budget “invests directly in the American people and will strengthen our nation’s economy and improve our long-run fiscal health”.

What’s in the plan?

The White House says the proposal will help grow the economy from the bottom up and middle out.

This budget promises:

More than $800bn for the fight against climate change, including investments in clean energy
$200bn to provide free pre-school places for all three and four-year-olds
$109bn for two years of free community college for all Americans
$225bn for a national paid family and medical leave programme – bringing the US in line with comparable wealthy nations
$115bn for roads and bridges and $160bn for public transit and railways
$100bn to improve access to broadband internet for every American household

The budget also has a noticeable absence: the Hyde Amendment, a federal provision that says taxpayer money cannot fund abortions in US states except in cases of rape and incest.

Mr Biden is the first president in decades to exclude the abortion coverage ban, a move that has already been applauded by progressives. He supported the amendment for years before changing course during last year’s presidential campaign.

But the president’s plan faces an uphill battle in the Senate, where several centrist members of his own party could side with Republicans in supporting the Hyde Amendment.

What about inflation and the deficit?

Top White House economic adviser Cecelia Rouse acknowledged the economy was now seeing inflation spikes, but projected it would settle down to an annual rate of around 2% over time.

Some economists, including Larry Summers, who advised Presidents Barack Obama and Bill Clinton, have warned such massive government spending could drive up inflation, forcing the Federal Reserve to raise interest rates, which would in turn raise the risk of a recession.

The Biden budget projects an additional $14.5tn would be added to US debt over the next decade.

But the White House estimates the plan would be completely paid for within 15 years as tax increases eat away at the deficit.

Critics, however, are sceptical about projected happy endings long after Mr Biden leaves office.

Republicans have expressed alarm at the record spending.

Senate minority leader Mitch McConnell on Friday called the plan a “socialist daydream”.

Senator Jerry Moran of Kansas said it would “saddle future generations with burdensome levels of debt”.

Biden’s big government dream

Analysis box by Anthony Zurcher, North America reporter

The era of big government is back – that is, if Joe Biden has his way.

Back in 1996, Bill Clinton famously said that big government was a thing of the past, as the Democratic president acquiesced to Republican efforts in Congress to slash welfare benefits and other federal funding.

In the two decades since, following the September 11 attacks, the Great Recession and a global pandemic, American support for government activism has returned – and Biden, long considered a political centrist, is proposing a budget that reflects that.

There are no massive new government proposals in Biden’s budget – no publicly run health insurance or free college for all – but his administration incorporates the president’s current legislative agenda and boosts spending for numerous social programmes, with a focus on health and education.

The Biden plan anticipates massive deficits – over $1tn annually – which will prompt condemnation from fiscal hawks on the left and right. And Republicans will pick apart specific spending items.

Presidential budgets are blueprints, however, and seldom resemble what Congress ultimately approves. What Biden’s proposal says is that he wants to keep the government spending spigots wide open – and that he thinks the American people will have his back.

Will it pass?

Congress has until the end of September to enact new spending bills. If they fail to pass a new budget, the government could partially shut down.

Mr Biden’s Democrats have a narrow majority in the House, and a meagre one-seat advantage over Republicans in the 100-seat Senate.

Unlike most other bills, budget measures can be passed with just 51 votes instead of the 60 typically required meaning he might be able to sign some of his plans into law without Republican support.

Republicans have already criticised Mr Biden for the size of his spending – including the $1.9tn spent on coronavirus relief earlier this year.

media captionHas Biden unified the country? Watch as Americans weigh in.

And ensuring all Democrats are on board won’t be easy either. While Democrats are broadly in support of his spending initiatives, there are sure to be sticking points.

Mr Biden’s increase in military spending, for example, may cause issues among the more progressive members of his party.

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