Can President Joe Biden still be classified as a moderate today? After releasing his first 72-page federal budget in the opening months of his first term, Biden has revealed that he is appealing to the progressive wing of the Democratic Party instead of embracing the centrist spirit that he portrayed in 2020. But, with a federal government $28 trillion in debt, what kind of middle-of-the-road politician can propose spending additional trillions with a straight face? The president might be taking the cue from his fellow globalists, but his inaugural budget may have long-term consequences for the wellbeing of the United States.
An Inside Look at the Biden Budget
President Biden is proposing a $6 trillion budget for the fiscal year 2022. If approved, it would consist of the most spending since the Second World War, pushing up the national debt to 117% of the country's gross domestic product. The scheme requests outlays to increase to more than $8 trillion by 2031. The administration asserts that today's budget would help reduce the annual deficit beginning in 2030, and increasing the yearly spending would cut the shortfall by more than $2 trillion. Officials believe this level of astronomical spending unseen in more than half a century would be “more than paid for” by tax code reforms.
With slim Democrat majorities, Washington observers are warning that this wish list of a federal budget will have some hurdles to climb, potentially resulting in some give-and-take between the Republicans and Democrats. A skinnier version is more likely to be enacted.
But what specifically is inside the Biden budget?
First, the budget includes the White House’s two-part infrastructure plan components: the American Jobs Plan and the American Families Plan. These comprehensive programs include substantial "investments” in child care, education, health care, infrastructure, paid family leave, research and development, and much more. The scale of spending and the president's efforts would radically transform the United States economy, with the idea of "shared prosperity," according to Shalanda Young, the acting director of the Office of Management and Budget (OMB).
Here are several provisions within the plan to help accomplish the goal of building back better:
$4 billion in climate science and sustainability research.
$1.2 billion contribution to the Paris Agreement's Green Climate Fund.
$10 billion in humanitarian assistance to "vulnerable people” in foreign nations.
$10 billion in clean energy innovation.
$1.4 billion for a new Accelerating Environmental and Economic Justice Initiative at the Environmental Protection Agency (EPA).
$2 billion to hire welders, electricians, and skilled laborers to work on building clean energy projects.
$2.1 billion for the Department of Justice (DOJ) "to address the gun violence public health crisis."
$1 billion for efforts to end gender-based violence.
$400 million to expand opportunities for minority-owned businesses.
$861 million to Central America to better study "irregular" migration.
$421 million for state and local grant programs that include jurisdictions crafting gun licensing laws.
"Failing to make these investments at a time of such low-interest costs would be a historic missed opportunity that would leave future generations worse off," Young said. "This budget does not make that mistake, and its investments will pay dividends for generations to come."
Cecilia Rouse, the chair of the Council of Economic Advisers, explained that the president's "solid budget" is making up for "decades of underinvestment in important parts of our country."
There were also some glaring omissions that will perturb both sides of the aisle. First, there was nothing about a national $15 minimum wage, only one for federal civil servants. Second, the budget did not include the Hyde Amendment, a 45-year-old pro-life policy, a move which essentially permits taxpayer funding of abortions.
America Reacts
The GOP leadership has already verified that it will oppose the budget, and several Democrats in the House and Senate have voiced their concerns about the enormous price tag. House Minority Leader Kevin McCarthy (R-CA) described it as "the most reckless and irresponsible budget" in his lifetime. Some lawmakers, including Sen. Lindsey Graham (R-SC), think it is dead on arrival.
The financial markets were mixed on the news. Bonds initially popped before finishing the May 28 session unchanged. Stocks ended the trading day relatively flat, with investors adopting a wait-and-see approach amid the inevitable disputes within the razor-thin majorities. They may also be pleased that the White House is prognosticating inflation to top out at 2.1% over the next decade.
In the end, it might come down to gridlock, says Ed Yardeni, head of Yardeni Research. He told Barron's:
"The market loves gridlock, and there’s a perception that there may be enough to stymie some of these spending plans. Lawmaking is like watching sausages being made and most investors prefer not to watch it."
Can the US Afford Bidenomics?
Fiscal conservatives often point out that the U.S. government does not suffer from a revenue problem but rather a spending issue. This budget is perhaps a prime example of Washington being out of touch with the elementary principles of Accounting 101 or Economics 101. The ruling class is either blind to the realities of America’s pressing financial woes, or its apathy is incurable. The U.S. was in quite the pecuniary hole before the coronavirus pandemic, thanks to wars put on credit cards, both parties approving unfunded multi-trillion-dollar budgets, and the $120 trillion in unfunded liabilities and expenditures. COVID-19 brought the fiscal cliff closer to the nation’s feet.
President Biden is swinging at the first pitch, attempting to go bridge to start the ballgame. Should the president strikeout swinging, the next plate appearance, which will come months before the mid-term elections, will likely see Biden be more patient at the plate and pick his spots. Or, as is par for the course for Biden, he might forget entirely what he is swinging at.
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