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President Biden claimed Monday that his latest annual budget request dramatically reduces the federal deficit — despite the fact that Biden’s ask doesn’t include much of his social spending plans or acknowledge record-high outlays during the COVID-19 pandemic.
“My Administration is on track to reduce the federal deficit by more than $1.3 trillion this year, cutting in half the deficit from the last year of the previous Administration and delivering the largest one-year reduction in the deficit in U.S. history,” Biden said in a statement.
The federal budget deficit was about $2.8 trillion in fiscal 2021, when Democrats passed Biden’s $1.9 trillion American Rescue Plan Act without Republican support. The previous year, the deficit topped $3 trillion as a result of relief spending during the first months of the COVID-19 pandemic. In fiscal year 2019, the deficit was under $1 trillion, meaning unfunded spending would remain elevated amid four-decade-high inflation.
Biden’s $5.8 trillion budget proposal is unlikely to pass Congress as proposed and many of its ideas — such as new proposed taxes on billionaires — could face opposition from centrist Democrats in the 50-50 Senate as well as in the narrowly Democratic-held House.
“The spending is not slowing down,” former Trump White House budget director Russ Vought told Fox News Monday. “And so they’ve got to show the American people that’s experiencing inflation that they’re actually doing something about the problem.”
“This is being done as a head fake at the American people to suggest that they’re actually concerned about the deficit,” Vought added.
On a White House briefing call Monday morning, a Washington Post reporter pointed out that “a lot of the budget experts are saying we see the deficits falling” because of “temporary economic programs” passed during the pandemic.
“Three letters: ARP,” replied White House budget director Shalanda Young, referring to the American Rescue Plan. “This was not by accident. Had the president not had the wisdom and fortitude — as some people were saying it was time to retract and stop doing pandemic spending — I don’t believe, and many experts don’t believe, we’d be here.”
The proposal appears to not fully account for some items in Biden’s dormant Build Back Better Act, while including some of that legislation’s original theoretical revenue streams — including a boost in the corporate tax rate from 21 percent to 28 percent, which centrist Sen. Kyrsten Sinema (D-Ariz.) had opposed.
The budget also outlines smaller expenditures on projects than are actually contained in the Build Back Better Act. For example, the bill pitches $555 billion in environmental spending, including $320 billion in tax credits for buying electric vehicles, installing solar panels and improve energy efficiency. A press release describing the new budget proposal describes a much more modest $3.3 billion expense “to support clean energy projects.”
Sen. Joe Manchin (D-WV), another centrist, pulled the plug on the Build Back Better Act in December, citing high inflation, but the White House has continued to act as if the package remains under consideration — even as inflation soared in February to a fresh 40-year annual high of 7.9 percent.
The White House budget forecast an inflation rate of just 2.3 percent, but Biden economist Cecilia Rouse argued on the White House call that higher inflation doesn’t significantly change the deficit projections because new income and revenue would be similar.
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