In other areas, Mr. Biden is pushing what amounts to a permanent increase in the size of the federal footprint on the U.S. economy. Since 1980, annual federal spending has been, on average, about one-fifth the size of the nation’s economic output; under Mr. Biden’s plans, that would grow to close to one-fourth. The federal work force would also grow: The American Federation of Government Employees thanked the president on Friday for proposing “substantial staffing increases to multiple agencies.”
That growth would be funded by businesses, high earners and federal borrowing.
The budget projects an additional $14.5 trillion would be added to the national debt over the course of the next decade. It also projects a doubling of the amount of tax revenue collected from corporations by 2025, compared with 2020, the year before Mr. Biden took office. But it would take more than a decade for tax revenues to fully cover the costs of Mr. Biden’s agenda.
Corporate tax increases would raise $2 trillion over a decade, with nearly half of that revenue coming from higher taxes on money that multinational companies like Microsoft, Procter & Gamble and General Motors earn outside the United States.
Tax increases on high earners — those making above $400,000 per year — would raise another $750 billion over the decade. That includes raising the top marginal income tax rate to 39.6 percent from 37 percent for married couples making just over $500,000 a year and individuals making just over $450,000. The proposal also estimates a near-doubling of capital gains tax rates for people earning more than $1 million a year. Revenue from those tax increases would begin reducing deficits by the end of the decade.
Yet while Mr. Biden has pledged not to raise taxes on people earning less than $400,000 a year, the budget assumes that tax cuts passed by Republicans in 2017 would expire as scheduled at the end of 2025, which would raise taxes on most Americans. On Friday, administration officials said the president would work with Congress before 2025 to ensure people earning less than $400,000 would not face a tax increase.
- A new year, a new budget: The 2022 fiscal year for the federal government begins on October 1, and President Biden has revealed what he’d like to spend, starting then. But any spending requires approval from both chambers of Congress.
- Ambitious total spending: President Biden would like the federal government to spend $6 trillion in the 2022 fiscal year, and for total spending to rise to $8.2 trillion by 2031. That would take the United States to its highest sustained levels of federal spending since World War II, while running deficits above $1.3 trillion through the next decade.
- Infrastructure plan: The budget outlines the president’s desired first year of investment in his American Jobs Plan, which seeks to fund improvements to roads, bridges, public transit and more with a total of $2.3 billion over eight years.
- Families plan: The budget also addresses the other major spending proposal Biden has already rolled out, his American Families Plan, aimed at bolstering the United States’ social safety net by expanding access to education, reducing the cost of child care and supporting women in the work force.
- Mandatory programs: As usual, mandatory spending on programs like Social Security, Medicaid and Medicare make up a significant portion of the proposed budget. They are growing as America’s population ages.
- Discretionary spending: Funding for the individual budgets of the agencies and programs under the executive branch would reach around $1.5 trillion in 2022, a 16 percent increase from the previous budget.
- How Biden would pay for it: The president would largely fund his agenda by raising taxes on corporations and high earners, which would begin to shrink budget deficits in the 2030s. Administration officials have said tax increases would fully offset the jobs and families plans over the course of 15 years, which the budget request backs up. In the meantime, the budget deficit would remain above $1.3 trillion each year.
It was one of several areas in which Mr. Biden’s team chose not to apply traditional budget estimates to his administration’s policy initiatives.
In its budget summary, the White House signaled a commitment to a range of major health care proposals, including the creation of a public option health insurance plan; an effort to reduce prescription drug costs; a plan to lower the age of eligibility for Medicare; and an expansion of Medicare benefits, to add vision, hearing and dental coverage. But the administration declined to calculate the costs of those policy changes.