Biden's new budget ditches FDR-style spending ambitions

• By focusing on deficit spending as a cause of inflation, administration officials are starting to parrot an argument Sen. Joe Manchin (D-W.Va.) made in rejecting Biden’s Build Back Better agenda: new programs that aren’t fully offset can drive up prices.
• The president also wants to assure Americans he'll increase defense spending in the face of new threats from Russia, and fund the police to keep Americans safe at home.
• A year ago, historians Biden hosted at the White House spoke of an election mandate they saw propelling a new New Deal. "I'm no FDR, but … " Axios co-founder Mike Allen quoted him as telling Doris Kearns Goodwin.

What they are saying: In previewing the FY23 budget, officials took credit for the $1.3 trillion deficit drop in 2022.

They also promised to reduce deficit spending by another $1 trillion over the next 10 years.

• “A lower deficit will help ease long-term inflationary pressures and make our fiscal trajectory more sustainable,” Council of Economic Advisers chair Cecilia Rouse told reporters Monday morning.
• “Last year, they were going to pay for their investments over 15 years, and only start to reduce the deficit in the ninth year,” said Joel Friedman, a senior vice president for federal fiscal policy at the Center on Budget and Policy Priorities.
• “And now, they are reducing the deficit in every year.”

But, but, but: The White House still cites the pandemic, broken supply chains and Russia’s invasion of Ukraine as the primary drivers of inflation.

• “We see this inflation across the developed world,” Rouse said.
• And Biden officials say the $1 trillion bipartisan infrastructure bill will make delivering goods easier while lowering inflation.
• They’re also confident Congress will pass a China competitiveness bill to transform America's semiconductor industry — another legacy accomplishment for the president.

The intrigue: Biden has a placeholder — which officials described as a “deficit-neutral reserve fund” — for any revised climate and social spending bargain he may be able to strike with Manchin and fellow 2022 holdout Sen. Kyrsten Sinema (D-Ariz.).

• The president said in a tweet Monday: "My father had an expression: 'Don’t tell me what you value. Show me your budget — and I’ll tell you what you value.'”
• But Manchin has told colleagues he wants half of any new taxes on corporations and wealthy Americans to go toward deficit reduction — not fresh spending.

The big picture: Even with the unemployment rate below 4% and GDP above 5%, voters appear to be blaming Biden for the higher prices they encounter in everyday life.

• Gas is over $5 a gallon in many places and grocery bills are up week after week.
• Biden’s overall approval rating fell to 40% in a new NBC News poll, with only 33% of respondents giving him good marks for his handling of the economy.
• 62% of voters think their family’s income is falling behind.

Between the lines: Biden’s plan to impose a 20% minimum tax on the income and unrealized capital gains of households with more than $100 million in assets is a nod toward both progressives and deficit hawks.

• The proposal has echoes of the signature wealth tax pushed by Sen. Elizabeth Warren (D-Mass.), even though Biden is only targeting income.
• He’s also dedicating the additional $360 billion in revenue for deficit reduction — a priority for centrists.

Go deeper: The president's move to the center extends beyond deficit spending.

• He also proposed 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.
• He's also calling for some $813 billion for military spending, a 4% increase from this year, and additional money for Ukraine.