President Joe Biden’s annual budget outline won’t be released until Thursday, but we already know some of the broad strokes.
He wants to maintain the US as the arsenal of democracy and will pump up the Pentagon budget.
He’s sensitive to the size of the national debt and the unsustainable path of Medicare and Social Security and he’s devised a way to cut budget deficits by nearly $3 trillion over the next decade.
And he’s not going to raise taxes on anyone who makes less than $400,000 per year.
How’s he going to do all that?
We’ll have to wait for the details to see how exactly he waves his magic budget wand to accomplish these feats. But he gives us a tease in a guest essay for The New York Times opinion section in which he explains that some deficit reduction will come from allowing Medicare to negotiate prices for more drugs, driving prices down and raising the Medicare tax rate on earned and unearned income above $400,000 by 1.2 percentage points.
Checking the White House math – how do they reach that $3 trillion and how long would it really take? – will be key.
What Biden doesn’t say is that Democrats couldn’t get these same ideas passed into law when they controlled all of Capitol Hill last year, before Republicans controlled the House.
Add to that the specter of a potentially economy-wrecking default on the nation’s debt if the sides can’t come together by this summer, which means the stakes of this debate are very high.
‘Show me yours’
What’s going to be more important than Biden’s proposal is how the White House budget gets reconciled with Republicans’ vision, which has not yet been released and has no planned release date.
CNN’s John King effectively summed up Biden’s budget rollout, which is an opening bid to Republicans.
“You have a Democratic president saying I’m going to have one of the biggest Pentagon budgets ever, I’m going to slash $3 trillion from the deficit and I’m going to try to shore up Medicare and entitlement programs. It’s essentially a political document saying, ‘Show me yours,’” King said.
Snowballs in Washington
The most important thing you need to know about Biden’s budget proposal is that it doesn’t have a snowball’s chance in hell of making it past the Republican-controlled House.
Speaking of snowballs, check out this very good interactive CNN story on federal spending. It uses the analogy comparing the national debt with snow forming and growing into a snowball until it takes over your screen. See it.
The current picture
As a good primer for this budget season – which has the potential to be among the most epic budget seasons ever in Washington – the interactive also has a visual breakdown of what the government spent a total of $6.27 trillion on in fiscal year 2022:
- Social Security: $1.22 trillion (19% of the budget).
- Health, including Medicaid and health insurance for some children: $914 billion (15%).
- Income security: $865 billion (14%).
- National defense: $767 billion (12%).
- Medicare: $755 billion (12%).
- Education, training, employment and social services: $677 billion (11%).
- Net interest: $475 billion (8%).
- Other: $600 billion (10%).
About the Republican plan
Republicans will ultimately have to coalesce around their own budget vision, but they do not speak with one voice. Far from it. And the math is as difficult for them as it is for Biden
House GOP leaders have promised not to cut Social Security (19% of the budget), Medicare (12%) or defense (12%). Factor in required interest payments and other mandatory spending and that’s less than half the budget eligible for cuts.
The hard-line Republicans hold sway over House Speaker Kevin McCarthy and, were they to unite against him, have the power to boot him as Republican leader.
As part of the deal that made him speaker, McCarthy agreed to pass a budget that rolls back 2024 spending to 2022 levels, which could equal a 25% inflation-adjusted cut from domestic discretionary spending for much of the government if defense spending is exempted.
That level of cutting is bound to turn off cooler heads in the party and seems as fanciful as Biden’s plan to raise taxes with a Republican House.
One conservative proposal suggests massive cuts
The hard-line Republicans are enamored with a budget plan drawn up by Russell Vought, the former director of the Office of Management and Budget under former President Donald Trump who now runs the fledgling Center for Renewing America.
All of what Vought calls the “woke and weaponized bureaucracy” would be on the table – trillions in spending over a decade. Other people call it the government.
The steep cuts suggested in that incredible document would equal $10 trillion over 10 years by slashing safety net spending like food assistance and a Medicaid expansion enacted as part of the Affordable Care Act that has given millions of Americans health insurance.
Vought’s proposal would cut nearly $7 billion from the Department of Justice, targeting its Civil Rights Division and the FBI.
The US Centers for Disease Control and Prevention and other health-related offices would be cut substantially, and foreign aid, although a relatively small portion of the federal budget, would see steep cuts.
That wildly successful AIDS relief program we told you about recently, PEPFAR, would not be ended but would stop providing care for any new patients. Student loans, federal housing programs – name something outside of Social Security, Medicare and the Pentagon (and immigration enforcement), and it would probably be cut under Vought’s plan.
It’s not clear what, if any, of these proposals Republicans might endorse. There’s an element of the party that wants to see extreme cuts. Bringing the party together over a plan will be McCarthy’s first challenge.
Whatever it is, it’s going to be late
The budget process allows for the House and Senate to edit and vote on the White House budget before reconciling the versions and using it as a guide for annual appropriations bills, which are separate.
The process never works that way. The final budget is rarely passed. Biden is close to a month late in offering his version of the budget. Congress in recent years has passed one massive spending bill long after the federal government’s fiscal year starts in October.
But there will have to be some movement before the fall, since the debt ceiling will likely need raising over the summer.
Source – CNN
