President Biden’s newly proposed budget for fiscal year 2024 will lead to a “record” national debt, a watchdog warned.
The Biden administration submitted the new proposal on Thursday, which outlines the president’s goals in economics, education, climate and health care for the next decade. But the committee for a responsible federal budget warns that the budget would cause the country’s debt to rise from 98 percent of GDP at the end of 2023 to 106 percent in 2027 and then 110 percent in 2033.
According to their analysis, despite some efforts to reduce the deficit, nominal debt would nearly double and grow from $24.6 trillion to $43.6 trillion over the next decade.
“Debt under the president’s budget would grow to a new all-time high as a share of the economy over the next decade,” the CRFB wrote in an analysis.
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US President Joe Biden talks about his proposed federal budget for FY2024 at an event at the Finishing Trades Institute on March 9, 2023 in Philadelphia. (Chip Somodevilla/Getty Images)
“This budget falls short of the deficit reduction needed to put the nation on a sustainable fiscal path,” the watchdog continued. “We are disappointed that the cuts to this budget – given the massive spending growth of recent years – are less than 1 percent of the budget and are accompanied by four times the spending increases. We are pleased that the budget is starting to tackle Medicare, but very disappointed that it is ignoring Social Security, jeopardizing senior benefits.”
President Biden repeatedly defended his budget on social media on Thursday, calling it a budget “for the middle class.”
“With my budget, we can reduce child poverty and increase opportunities for children,” he added. “To support working parents, my budget increases access to affordable, high-quality childcare for millions of families. And it invests in paid family and sick leave so that we will no longer be the only major economy with no nationally paid leave.”
The CRFB report notes that the deficit would also grow by $17 trillion over that period, as expenditures would reach 25.2% of GDP, while revenues would reach 20.1% in 2033. sales average of 17.4%.
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US President Joe Biden addresses members of the press after arriving at the White House in Washington, DC on March 9, 2023. (Alex Wong/Getty Images)
The CRFB analysis applauded the uniquely idyllic $2.8 trillion budget deficit reduction via new spending and tax breaks, but said it “relies on somewhat optimistic economic assumptions” for projected growth.
“The president is to be commended for pushing forward $3 trillion in deficit reduction, which could be an achievable near-term bipartisan goal in the upcoming negotiations. Ultimately, however, the deficit reduction will need to be nearly three times that, and it is disappointing that the budget is to put forward so many costly proposals without first putting the country’s budget in order,” said the CRFB.
These assumptions include “stronger long-term growth, lower unemployment and lower long-term interest rates” than those proposed by the Congressional Budget Office (CBO), which forecasts growth of 0.4% this year, 2.1% next year and be 2.2%. % growth by the end of the decade – as opposed to the CBO’s forecast of 0.1% growth this year, 2.5% growth next year and 1.7% by the end of the decade.
A breakdown of the proposed budget showed that most of the federal spending came from expanding access to and funding for pre-K and child care, totaling $600 billion over the next decade.
Other spending costs come from establishing national paid family and sick leave ($325 billion), offering “free” community college and increasing other higher education spending ($217 billion), and supporting affordable housing policies ( $105 billion).
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The budget also supports the Affordable Care Act and the national health care system by extending and expanding ACA grants and coverage ($185 billion) and increasing other health care and long-term care spending ($309 billion).
The budget also aims to expand the Child Tax Credit ($435 billion) and the Earned Income Tax Credit ($156 billion).
Cost savings and spending savings come from lower prescription drug and health costs, saving $227 billion over the next decade. It also reduces discretionary defense spending by $211 billion.
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The budget also proposes to raise the corporate tax rate, establish a new 25% tax floor for billionaires and reduce “the tax gap”, saving $1.4 trillion, $437 billion and $119 billion respectively .
CRFB President Maya MacGuineas believed the budget “doesn’t go far enough” to eliminate record spending and would result in another record high debt.
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“The president’s budget would borrow $19 trillion through 2033 and raise the debt-to-GDP ratio from 98 percent at the end of 2023 to 110 percent in 2033, beyond the record set in this country just after World War II,” MacGuineas said in a statement. Thursday. “It would spend $10.2 trillion in interest payments on the national debt alone — more than it will spend on defense or Medicaid in the same period.”
US President Joe Biden talks about his proposed federal budget for FY2024 at an event at the Finishing Trades Institute on March 9, 2023 in Philadelphia, Pennsylvania. Seen as a preview of his re-election platform, Biden’s proposed budget is expected to reduce the deficit by $3 trillion over the next 10 years. It remains unlikely that the plan will find any support in the Republican-controlled House of Representatives. (Chip Somodevilla/Getty Images)
MacGuineas added: “Most of these massive borrowings are the result of policies put in place years ago by both the Democratic and Republican administrations and Congress, but it takes presidential leadership to make real changes, and this budget doesn’t go nearly far enough that curbing our dangerous debt levels is a top national priority.”
Republican lawmakers have criticized the budget proposal, saying it generates “taxes, taxes, and more taxes” and that spending increases would exacerbate inflation in America.
