James Carter,
March 25, 2022
Evaluating the Biden Administration’s Budget Proposals
According to press reports, the Biden Administration is preparing to release its fiscal year 2023 budget on Monday, March 28. While it’s impossible to weigh the merits of the president’s budget before it is made public, it’s not too early to begin thinking about how we should evaluate it once that happens. While some of the individual policies underlying the president’s budget may hold merit in and of themselves, we can get a reasonable sense of the overall budget’s merit by asking and answering 11 questions. They are as follows.
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Fiscal Year 2022 Proposal |
Fiscal Year 2023 Proposal |
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Does President Biden’s budget …
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… cut federal spending? |
No. President Biden’s first budget proposed to increase federal spending by $5 trillion over 10 years relative to the then-current law baseline.
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TBD |
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… hold the line on taxes?
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No. Biden’s FY22 budget called for raising taxes $3.6 trillion relative to the baseline.
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TBD |
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…deliver robust economic growth? |
No. The Biden Administration’s predictions indicate that adopting the president’s policies would lead to tepid growth.
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TBD |
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… reduce the federal budget deficit? |
No. The 10-year, cumulative deficit would increase $1.4 trillion under Biden’s budget.
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TBD |
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… put the federal government on the road to a balanced budget?
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No. Not even close. |
TBD |
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… trim the hundreds of billions of dollars the federal government spends annually on federal interest payments?
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No. The larger cumulative deficit proposed by President Biden would necessitate a $163 billion increase in interest payments on the federal debt.
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TBD |
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… prioritize resources for national defense?
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Debatable. While the budget increased non-defense discretionary spending by $616 billion over 10 years relative to the baseline, defense discretionary spending was slated to fall $169 billion under Biden’s budget.
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TBD |
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… reign-in America’s out-of-control entitlement spending?
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No. In fact, President Biden’s first budget proposed increasing entitlement spending for FY22-31 to $45.99 trillion—an increase of 10.5% relative to the current law baseline.
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TBD |
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… save Social Security from insolvency? |
No. Social Security is projected to become insolvent in 2033, and the president’s budget did not propose any changes to prevent that from happening.
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TBD |
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… save Medicare from insolvency? |
No. Medicare is expected to become insolvent in 2026. Rather than seek to make Medicare solvent, President Biden’s FY22 budget proposed to expand benefits.
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TBD |
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… offer tax policies designed to keep U.S. employers competitive internationally?
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No. The president’s first budget would have hiked corporate income taxes 56% over the course of the decade.
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TBD |
The bottom line? President Biden’s fiscal year 2022 budget fell short in nearly every regard. We shall soon see if the president’s second budget reverses course or continues with more of the same.