Although President Biden began his term more than four months ago, his first budget submission to Congress, released last Friday, is a less complete offering than is typical, and leaves many questions unanswered. That may be purposeful, to avoid criticism, but it also surfaces a nagging worry: that, on matters of budget process and fiscal discipline, this administration may not offer a clean break from its predecessor. That portends much trouble ahead.
The president’s budget spells out the major spending increase he seeks. All totaled, the budget proposes to plus up federal outlays by $5.0 trillion, or 7.8 percent, over a decade, relative to a current law baseline. Taxes would rise by $3.6 trillion, or 7.1 percent, over the same period.
Once upon a time, presidents were hesitant to widen deficits during expansions. No more. The Biden budget would increase federal borrowing by $1.4 trillion over ten years, even as the administration expects real GDP growth to accelerate in 2021and remain near 2 percent through 2031. The total deficit over the period 2022 to 2031 would be $14.5 trillion, and average 5.9 percent of GDP annually. During much of the postwar period, typical annual deficits were between 2 and 3 percent of GDP.
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