Politics

Biden wants to “reinvent” the economy with a 2022 budget of 6 trillion dollars

That makes greenbacks! Joe Biden unveiled his very first draft budget for the year 2022 on Friday. Education, health, infrastructure, and even climate change are at the heart of his priorities, as he had promised during his presidential campaign and presented broadly in early April. Radically opposed to those of Donald Trump.

“We must seize the moment to reinvent and rebuild a new US economy that invests in the promise and potential of every American,” the US president said in a message to Congress. A sizeable ambition, also possible with a sizeable budget. 6,000 billion dollars, predicts the American President. Spending that would inflate the country’s debt to an unprecedented level.

Two investment plans to create millions of jobs

The Covid-19 plunged the United States into its worst economic crisis since the 30s, and if the first economy begins to recover, it is still far from pre-pandemic levels. “Despite all the hard-won progress our country has made in recent months, America cannot afford to simply return to where it was before the pandemic and economic downturn, with structural weaknesses and inequalities in the world. the old economy still in place, ”warned the president.

To do this, it is counting on two investment plans, included in this project and which should make it possible to create millions of jobs: a first “for American families” of 1,800 billion dollars over 10 years, another on infrastructure. , subject of bitter negotiations between the administration and the opposition. Republican senators are proposing $ 928 billion over eight years, compared to $ 1.7 trillion for the Democrats who agreed to plan they’re $ 600 billion projects.

Surpass China

The White House tries to spare the elected representatives of Congress, who will vote or not the draft budget. Joe Biden can certainly count on Democratic majorities in the House of Representatives and the Senate. But they are so narrow, especially in the upper room, that he can hardly afford any defection.

These plans, intended to build the “new American economy”, must also allow “the United States to surpass its rivals”, starting with China. Because if there is one field on which the president is in the footsteps of Donald Trump, it is that of commercial competition with the Middle Empire.

Defense budget increase

The total amount of planned spending for the fiscal year 2022 stands at $ 6 trillion, down from 2020 and 2021 when the federal government had to incur sky-high spending to deal with the Covid-19 pandemic. For comparison, the 2020 budget presented by Donald Trump in 2019 covered approximately $ 4.7 trillion in spending.

Joe Biden intends to significantly increase the amounts allocated to investments in education, health, and infrastructure. The defense budget increases slightly to $ 756 billion.

Taxes for the richest will rise

But all of this spending risks driving up debt, which now represents more than 100% of gross domestic product. It is expected to reach 111.8% of GDP in 2022 and 117% in 2031. As promised, Joe Biden wants to raise taxes for the richest Americans and for big businesses, which will more than double in the next ten years. “Over time, the savings from these reforms will exceed the cost of investments,” added the president, promising “large and growing” gains and a reduction in the annual deficit “by the end of the ten-year budget period. and every year thereafter. ”

But he will have to deploy treasures of persuasion to convince Republicans to vote in favor of this reform, which would unravel the tax cuts implemented by Donald Trump.

Do not increase the country’s debt

The administration also intends to take advantage of historically low-interest rates to finance its budget without increasing the country’s debt with high interest to repay. The White House budget usually marks the beginning of the never-ending process that leads to government funding.

In the event of disagreement between the two parties on the bill, the risk is that the federal administration, not funded, is forced to close: it is the “shutdown”.

About the author

Praneet Thakur

News Media Reporter

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