Biden's 2023 budget focuses on deficit reduction
President Biden plans to spend $1.58 trillion of the $5.8 trillion in his proposed 2023 budget to bolster America’s defenses and maintain robust economic growth, while also addressing inflation by lowering the federal deficit and costs for working families.
Driving the news: Biden on Monday is sending Congress his top line tax and spending requests for the next fiscal year, which includes $773 billion for the Department of Defense.
- "Budgets are statements of values, and the budget I am releasing today sends a clear message that we value fiscal responsibility, safety and security at home and around the world, and the investments needed to continue our equitable growth and build a better America," Biden said.
Why it matters: Presidential budgets are meant to be an opening bid by the White House in annual negotiations with Congress on how to fund the federal government.
- Biden is leaving a giant blank space for the cost for any potential climate and social spending agenda, previously known as Build Back Better.
- White House officials declined to provide specifics on their Build Back Better priorities, with some signs that Sen. Joe Manchin (D-W.Va.) may be prepared to return to the negotiating table after killing a $2.2 trillion House-passed bill in December.
The big picture: With last month's Consumer Price Index landing at 7.9%, Biden and his economic advisers are acknowledging that inflation is eating into consumer’s purchasing power.
- But they are insisting that that higher prices will drop next year and they blame most of the increase on disrupted supply chains and Russia’s invasion of Ukraine.
- “America was not immune to the worldwide inflation that has followed the pandemic — leaving too many families struggling to keep up with their bills,” Biden said.
- “Supply chain pressures will ease,” Cecilia Rouse, the chair of the Council of Economic Advisers, told reporters on a conference call this morning.
Go deeper: Biden’s budget estimates that this year’s deficit will drop by $1.3 trillion, as pandemic spending is phased out and tax receipts continue to increase as a result of robust economic growth.
- They plan to decrease the deficit another $1 trillion over 10 years, through higher taxes, including a new 20% minimum tax on households with more than $100 million in assets.
- President Biden will propose more than $32 billion in new spending to fight crime, putting a price tag on his State of the Union call to fund — not defund — the police.
- Biden also wants to increase the corporate tax rate from 21% to 28%, which was rejected by Sen. Kyrsten Sinema (D-Ariz.) in the Build Back Better negotiations last year.
By the numbers: Real GDP grew by 5.6% in 2021 and the White House estimates that it will grow by 3.8% this year.
- Inflation is expected to run at 4.7% for 2022, with the budget estimating that it will drop to 2.3% in 2023.
- The unemployment is forecast to be 3.9% for this year, and dropping to 3.7% next year.
Between the lines: The White House’s inflation assumptions were made in November, before the war in Ukraine led to additional increases in food and energy costs.