US President Joe Biden aims to spend six trillion dollars (almost five trillion euros) in the budget for the next fiscal year that begins in October, and increase the budget to 8.2 trillion by 2031. The proposal , which will be presented this Friday, seeks to strengthen the country’s economy and promote its competitiveness in the world. If the federal budget goes ahead, all public debt records will be broken and federal spending would reach its highest level since World War II. But first, Biden must overcome resistance from Republicans, and some Democrats, in Congress.
The sharp increase in spending, anathema to the Republican opposition, responds to the ambitious double agenda of modernizing infrastructure and expanding social coverage, the two pillars of Biden’s mandate that are known, respectively, as the American Employment Plan and the Plan of American families. The ultimate objective of both is to expand the segment of the middle class, rescuing layers of the population from poverty – through the supply, for example, of more than two million affordable homes – and to strengthen the national industry to face the challenges of a global economy threatened by pressure from climate change and competition from China.
The public spending contemplated in the budget, whose content advanced this Thursday The New York Times, will shoot the budget deficit above 1.3 trillion dollars in the next decade, although, according to estimates by the White House economic team, it is expected that by then it will have peaked and will begin to decline. Biden himself confirmed the amount to reporters hours after the newspaper advanced the budget.
After a small advance known in April, focused on social spending and the fight against climate change, the first complete federal budget of the Democratic Administration is expected to be known for the fiscal year that starts on October 1. It ranges from foreign aid and immigration policies to increased funding for Medicaid, the public health coverage plan for lower-income Americans, and other programs that consume most of the federal budget.
The proposal will also have a place, according to the agency Reuters, Pentagon funding, which Biden intended to keep unchanged but now includes the purchase of 85 fifth-generation F-35 fighters from Lockheed Martin to boost domestic industry, another of his tenure’s mantras. It will also reflect the large military aid to Israel, a source of dissent in the ranks of the Democratic Party, and which now amounts to 3.8 billion dollars a year. Aid to Israel and Egypt, a key element in the achievement of the ceasefire between Israel and Hamas, is expected to continue.
The Democratic president plans to finance his measures by increasing corporate tax and a higher tax on the highest incomes, those with incomes starting at $ 400,000 per year, for the next 15 years, a purpose that also clashes with the opposition. republican. In 2017, a tax reform came into force that, at the behest of Donald Trump, benefited the wealthiest.
After the approval of the urgent rescue plan of the pandemic, of 1.9 trillion and the only one endorsed by Congress, Biden faces resistance from Republicans, and some Democrats – well the centrist faction, opposed to overspending; well the progressives, opposed to aid to Israel – to carry out its double infrastructure plan. Conservatives have presented two counter offers despite the White House already lowering the initial budget to $ 1.7 trillion from $ 2.25 trillion. A group of Republican lawmakers submitted an initial $ 568 billion counterproposal a week ago.
The latest Republican counteroffer has been welcomed by the White House. “We value the hard work and the willingness to continue negotiating. On a first reading, we appreciate several constructive additions, but we remain concerned that their plan does not yet contemplate substantial new funds to create jobs in critical sectors, such as veterans’ hospitals, replacement of lead-contaminated plumbing or clean energy, ”he stated. yesterday the White House spokeswoman, Jen Psaki, who also criticized the lack of budget specificity of the Republican proposal.
Still, things appear to be moving quickly as July 4 looms, the date around which the Biden Administration claims to have concluded bipartisan negotiation. The president spoke yesterday with Senator Shelley Moore Capito, who leads the group of Republican negotiators. “I have told him that we must conclude all of this quickly,” Biden said.
In clear support for the White House’s budget ambition, US Treasury Secretary Janet Yellen yesterday urged Congress to increase public spending to help the country recover, before the start of budget negotiations in the Legislature. In an appearance before the House Appropriations Committee, a decisive body on the budget, Yellen lamented that inflation-adjusted spending has remained stagnant for the past 11 years for the department she leads. “We cannot manage the recovery well with a budget designed for 2010,” said the head of Economy.
All the indicators indicate that the recovery is consolidated thanks to the control of the pandemic by mass vaccination. The gross domestic product (GDP) grew by 1.6% in the first quarter of the year compared to the three previous months, according to the Office of Economic Analysis (BEA, for its acronym in English) yesterday. This is the second estimate of the United States Government on economic activity at the beginning of the year after the annual contraction of 3.5% of GDP registered in 2020. With regard to the annualized rate, the growth that the If the US economy maintains this rate throughout the year, the figure would be 6.4%. An unprecedented growth since the eighties of the last century.
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.