WASHINGTON – With a US$6 trillion (RM24.8 trillion) price tag, the first Budget proposal of Joe Biden’s presidency is intended to create a more resilient and competitive American economy, and will be funded by higher taxes on big businesses and the rich.
Here are key points of the proposal, which covers the 2022 United States fiscal year and is subject to approval by Congress:
Jobs, Families Plans
The Budget is composed mostly of programmes Biden has already announced, including the approximately US$2 trillion in proposed infrastructure spending in the American Jobs Plan and the US$1.8 trillion American Families Plan, which invests in education and social services.
These multi-year programmes will work across government agencies to set up public works projects that the Biden administration said will lead to millions of new jobs.
They also focus on programmes to improve productivity, such as expanding access to broadband internet and low-cost childcare, as well as establishing two years of free preschool and two years of free post-secondary education to increase the supply of trained workers.
The proposal said this spending will be paid for over 15 years.
Homelessness, health
The administration also proposed boosting funding to combat homelessness and gun violence, and address health crises, including the opioid epidemic.
The Budget earmarks US$30.4 billion for housing vouchers and to expand housing assistance to 200,000 more families, with a focus on those who are homeless or fleeing domestic violence.
There is US$10.7 billion set aside for research, prevention and treatment of opioid addiction, and US$2.1 billion to address gun violence by improving background checks and programmes to incentivise states to adopt gun licensing laws.
Climate crisis
The Budget includes a spending increase of more than US$14 billion to combat climate change, including by eliminating fossil fuel tax credits, and boosting incentives for alternative energy and zero-emission vehicles.
Paying for it
Biden already unveiled proposals to pay for his big priorities by increasing the corporate tax rate back to 28%, imposing a 15% minimum tax on the book earnings of large corporations, and tightening provisions to claw back taxes on overseas earnings.
The Treasury said the Budget includes “additional revenue measures that ask the highest-income Americans and large corporations to pay their fair share, and that make our tax system more efficient and equitable”.
The Budget also increases taxes on the richest individuals – including by eliminating long-standing loopholes – but the measures “do not increase taxes on anyone making less than US$400,000”, said the Treasury.
Deficits, growth
The budget projects the US gross domestic product to expand by 5.2% this year and 3.2% in 2022, and then slow to 2% or a little less in the following years.
Though economists have begun to worry that the US economy could overheat, the administration has forecast inflation of about 2% in the coming years.
Meanwhile, the plan expects to lower the deficit to US$1.8 trillion in 2022 from US$3.7 trillion this year – the equivalent of 7.6% of GDP in 2022 – and then falling to 5.6% the year after.
But the federal debt, which this year will surpass the size of the world’s largest economy, is expected to swell further to 111.8% of GDP.
The administration argued that “a Budget that reduced deficits today by underinvesting in the American people would result in slower, more stratified growth that would cause more damage than one that invested appropriately”. – AFP, May 29, 2021
