It also includes his proposal to raise the corporate tax rate to 28% and increase the capital gains tax on the wealthiest Americans to 39.6%, but it still runs a deficit of $1.8 trillion for FY 2022 and continues to run trillion-dollar deficits yearly over the next decade.
Shalanda Young, acting director of the Office of Management and Budget, said that after 2030, the budget policies will then start to reduce annual deficits, speaking on a call with reporters.
The budget unveiling traditionally kicks off lengthy negotiations or fights with Congress, which must approve federal spending.
The Biden administration released its budget on a Friday afternoon before a holiday weekend and as Congress leaves town for a week.
Senate Republican Leader Mitch McConnell pounced on Biden’s proposed deficit spending.
“Now we know why the Administration tried to bury their budget announcement on the Friday before a holiday weekend,” he said in a statement.
“President Biden’s proposal would drown American families in debt, deficits, and inflation. Even after the massive tax hikes Democrats want to force on the American people, they’d still have the government running trillion-plus-dollar deficits every year. Democrats want to borrow and spend on a scale that America has not seen since we had to fight and win World War II. Our debt burden would break all records, eclipsing even the 1940s.”
Federal spending would rise to about 25% of GDP and the budget forecasts the economy would grow 5.2% this year.
The proposal includes $36.5 billion for Title I schools, subsidies for child care, funding for universal pre-K and two years of tuition-free community college.
As Biden faces increasing pressure to act on gun violence with multiple deadly mass shootings having occurred in his young presidency, he is also asking for $2.1 billion, an increase of $232 million above the previous year, to address the problem.
This is separate from the $5 billion he’s proposing to address community violence in the American Jobs Plan.
“This is a solid budget that reflects President Biden’s vision for investing in people and society and ensures that the economy grows, and that everyone shares in the prosperity and it understands that the public sector is a key components and moving,” said Cecilia Rouse, chair of the Council of Economic Advisers.