WASHINGTON — President Joe Biden’s budget release on Monday is shaping up as a direct appeal to moderate Democrats, emphasizing deficit reduction and flexibility on social spending as the White House hopes to win support for new legislation before November’s midterm elections.
The request will show a $1 trillion reduction in deficit spending over the coming decade, generated in part by a new tax targeting the income and unrealized capital gains of billionaires. Federal spending will decline $1.3 trillion from last year alone, as pandemic assistance programs and emergency financing offered to state and local governments are eliminated.
The budget also sidesteps the particulars of Biden’s ambitious climate and social safety net proposals, in an explicit bid not to alienate lawmakers negotiating a pared-down version of the president’s "Build Back Better" agenda. National security spending — which remains politically popular among moderate lawmakers — will top $813 billion, representing a 4% increase from spending approved for the current fiscal year.
The proposal will be vetted for how it incorporates the biggest consumer-price surge in four decades, and what Biden proposes spending on his so-called “Unity Agenda.” That package, unveiled in the State of the Union address and designed to garner support from both sides of the aisle, would see billions of dollars for veterans, mental health, cancer research and fighting the opioid epidemic.
Yet as a whole, the budget appears designed to win over the moderate Democrats like Joe Manchin of West Virginia — who said in December he couldn’t support Build Back Better — and Sen. Kyrsten Sinema of Arizona, who have been impediments to Biden’s legislative aspirations.
Democrats are looking to jump-start work on the annual 2023 appropriations bills in the coming weeks to try to complete them before the midterm elections, which could result one or both chambers of Congress falling into Republican hands.
“The window is closing on domestic policy making, as little new action is likely once we get to August of this election year,” Tobin Marcus, senior U.S. policy strategist at Evercore ISI, wrote in a note last week.
The following are some key areas to look for in the lengthy — last year’s was more than 1,700 pages — release:
The White House will likely try to walk a line between baking high inflation into projections for coming years — risking an appearance of walking away from efforts to contain the escalating cost of living — and lowballing its consumer-price assumptions, inviting criticism that the administration is ignoring reality.
The Office of Management and Budget may seek to sidestep the issue, saying the economic assumptions were completed before Russia’s invasion of Ukraine heightened prices for energy and agricultural products even further.
Nevertheless, using a particularly low inflation rate as the basis for spending requests could prompt tough questions from lawmakers about whether the administration is asking departments and agencies to swallow an effective cut in resources.
Forecasts for deficit reduction could help Biden win backing from Manchin — if they’re viewed as credible.
The president’s budget isn’t expected to specify the costs or revenues of the changes the White House has pursued as part of Build Back Better. That’s a gambit by White House staff not to disrupt ongoing congressional negotiations.
Instead, Biden will offer only a broad endorsement of the climate, social safety net and tax code changes he’s long championed, while the budget tables themselves will feature only a placeholder. That means overall calculations won’t include the prices of proposals such as universal free pre-kindergarten, an expanded child tax credit and funding to combat climate change — or the deficit savings from policies such as prescription drug reforms or tax increases on corporations and wealthy Americans.
The hope among White House officials is that doing so demonstrates Biden’s commitment to his agenda without alienating Manchin, who has said publicly he wants to start fresh on a pared-down version of Build Back Better.
Keeping the fiscal impact of the agenda out of the budget tables, however, could bolster Republicans arguments that the budget doesn’t present an accurate accounting of Biden’s proposals.
Lawmakers and lobbyists alike will be watching to see how closely Biden’s tax ideas adhere to his plans from last year, when he proposed a raft of hikes on corporations and wealthy Americans totaling $3.6 trillion over a decade.
While some of the tax changes Biden designated to pay for Build Back Better won’t be included, the president will roll out a new plan for a minimum 20% tax rate that would hit both the income and unrealized capital gains of American households worth more than $100 million.
The addition of this plan to Biden’s tax proposal addresses a key critique from progressive lawmakers that the code does little to tax the richest Americans, who can often use a complicated system of credits and deductions to avoid paying taxes all together.
But it’s still not clear if the idea will carry water with Manchin, who has called the proposal convoluted, or Sinema, whose opposition to bolster income tax rates left Democrats to craft a series of sometimes complicated measures, including a 15% minimum tax on corporate profits, higher levies on foreign business income and an increased emphasis on audits to capture more revenue.
The president has asked lawmakers to fund his so-called Unity Agenda — items he’s argued should have support across political divides. That includes money to battle the opioid crisis — a focus of former President Donald Trump — and expanding the mental health workforce, in part to aid Americans destabilized by the pandemic, particularly children.
Biden has also called for significant new spending for veterans’ health, particularly to help those who developed respiratory cancer after exposure to burn pits. And he hopes to secure additional funding for his so-called Cancer Moonshot, including billions in research grants for an advanced experimental health research agency.
Budget readers will also be looking for what the plan omits — including, potentially, money for Ukraine. The White House began finalizing the budget before Russia’s invasion and the $13.6 billion in humanitarian and military aid approved by Congress earlier this month. The White House may be wary of cementing continuing expenses, given the years-long history of outlays for U.S. engagement in Afghanistan and Iraq.
The White House is also expected to sidestep funding for emergency pandemic assistance that would pay for testing, vaccines and treatments as the pandemic continues. It’s separately pursuing a $22.5 billion package to cover spending into the summer.
