President Joe Biden unveiled a $5.8 trillion budget request designed to appease moderate Democrats on Monday, with a proposal that emphasized deficit reduction, additional funding for police and veterans, and flexibility to negotiate new social spending programs.
Congress historically sets presidential budgets aside, and razor-thin Democratic majorities mean most proposals stand a slim chance of passing—but they do form a key messaging device. The White House included measures that would add up to the biggest tax increase in history in dollar terms, helping stabilize deficits relative to the size of the economy.
The 2023 budget calls for $1.598 trillion in so-called discretionary spending—areas that aren’t linked with mandatory programs like Social Security—with $813 billion for defense-related programs and $769 billion for domestic spending.
That marks a 5.7% increase from the omnibus spending bill for the 2022 fiscal year that was signed by Biden earlier this month. The budget would reduce deficit spending by $1 trillion over the coming decade, buoyed by the elimination of pandemic assistance programs, but with shortfalls averaging 4.7% of GDP over a decade, the national debt continues to climb.
“We are reducing the Trump deficits and returning our fiscal house to order,” Biden said at the White House Monday, referring to the widening budget gaps seen under his predecessor Donald Trump. “It makes prudent investment and economic growth and more equitable economy while making sure corporations and the very wealthy pay their fair share.”
Republicans said the budget unfairly imposes higher costs on Americans while failing to curb spending to cut the debt.
“This budget submission from the president shows he has learned nothing over the past year—nothing about how his policies have failed the American people—and he intends to double down on those very policies,” said House Budget Committee top Republican Jason Smith.
The president also sidestepped fragile negotiations over the remnants of his “Build Back Better” agenda, putting only placeholder figures in the document in what White House officials acknowledged was an effort to give lawmakers space to negotiate. That means the costs and revenues for what could be a $2 trillion program aren’t accounted for and it is simply declared fully paid for.
The hope in the White House is that Monday’s document can offer momentum to negotiations with lawmakers like Senators Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, who have raised concern over historic spending levels and inflation.
Ukraine funding is largely omitted from the document, which was prepared before Russian President Vladimir Putin’s invasion, but the budget does allocate $682 million toward assistance to Ukraine—including money for security, energy, cyber-security and economic stability.
Here are some key takeaways:
Economic Assumptions
Biden’s budget forecasts were prepared in November, before the latest surge in inflation, and now appear unrealistic.
Economic growth is pegged at 3.8% this year, slowing toward an annual 2% over the next decade. It assumes consumer prices will rise 4.7% this year, with inflation down to 2.3% in 2023 as supply chain disruptions ease.
White House officials said higher consumer-price increases shouldn’t have a big impact on the deficit expectations, however, given that revenues would also be higher.