Spending

Biden aims to increase military and social spending in 2023 budget

WASHINGTON — President Biden’s fiscal year 2023 budget will call for additional military spending in the face of Russian aggression against Ukraine, domestic funding for child care and climate resilience, and new taxes for the wealthiest Americans.

The proposal, to be released on Monday, could be the latest salvo in Mr Biden’s legislative agenda as Democrats face the prospect of losing control of Congress in what is expected to be a deadly midterm election.

Mr. Biden plans to ask Congress to help his administration tackle some of voters’ biggest concerns, including soaring inflation that has shaken consumer confidence and is contributing to a general sense of economic malaise. A senior administration official said the president’s budget would propose policies “that would reduce energy, health care, child care and other costs for families,” although no not know exactly what the White House will propose.

The budget will also seek additional funds to help combat the international crisis created by Russia’s invasion of Ukraine, which threatens to slow down the global economy.

Mr. Biden will seek $813.3 billion in national security spending, an increase of $31 billion, or 4%, from 2022, according to people familiar with the proposal. Funding from the Department of Defense will also include $4.1 billion to conduct research and develop defense capabilities, nearly $5 billion for a space-based missile warning system to detect global threats and nearly $2 billion for a missile defense interceptor to protect the United States against ballistic missiles. threats from states like North Korea and Iran.

The budget, which is simply a request to Congress and is not binding, will also offer an update on how the administration plans to advance spending and tax priorities included in Mr. Biden, who had to be cut last year. amid resistance from moderate Democrats like Senator Joe Manchin III of West Virginia.

It’s unclear whether the president’s budget proposal will simply outline the administration’s policy priorities or include a plan to push his agenda through a narrow majority in Congress. A White House official said the budget would echo Biden’s State of the Union address, which focused primarily on Russia’s invasion of Ukraine and listed his domestic policy proposals not to mention the Build Back Better label, which some in the White House have seen as an obstacle to negotiations.

“You’re trying to use a budget to indicate how you’re moving forward in a negotiation to actually do something while telling your base what we really believe,” said Jason Furman, a Harvard University economist and former economic adviser. of the Obama administration. to advise. “And the difficult thing is that the challenge is always how to put those two on.”

The White House will for the first time propose that Veterans Affairs medical funding receive its own separate funding stream. The administration plans to use the budget proposal to send a message to Congress that funding veterans deserves the same sense of urgency as investments in national security, according to officials familiar with the matter.

The proposal also aims to reduce federal deficits by a total of more than $1 trillion over the next decade, according to a White House document released Saturday.

As part of that plan, the budget will set a minimum billionaire tax, which would require U.S. households worth more than $100 million to pay a rate of at least 20% on their income as well as unpaid earnings. realized on the value of their liquid assets. , such as stocks and bonds, which can accumulate in value for years but are not taxed until they are sold. These revenues could also be directed to the president’s broader agenda.

Cecilia Rouse, chair of the White House Council of Economic Advisers, said last week that Mr Biden still wants to invest in improving access to child care, prescription drugs and health care. health and in the fight against climate change, without increasing the federal deficit. .

“The president is not just looking to make these types of investments as stimulus, which means they’re deficit-funded, he’s also committed to reducing the deficit along the way,” Ms Rouse said during of the National Association for Business Economics conference. . “And that’s what will be reflected in his budget.”

Economists will also be watching White House projections for economic growth and inflation, which is at its highest level in 40 years. The predictions could also have political implications.

“Too low an inflation estimate and it won’t be credible, but too high and it will become political ammunition for Republicans,” Beacon Policy Advisors analysts wrote in a note to clients.

Treasury Secretary Janet L. Yellen acknowledged on Friday that the global economy is facing headwinds and that Russia’s invasion of Ukraine could amplify inflationary pressure around the world on oil prices. energy and food. But she predicted that the US economy remains well-positioned despite these concerns.

“The growth over the past year has been extraordinary; job creation remains very high,” Ms. Yellen told CNBC. “When you look at the typical American family record, he’s in pretty good shape.”