President Joe Biden’s budget request highlights shrinking cumulative deficits by more than $1 trillion over the next decade, but that barely makes a dent in the government’s ballooning debt.
Biden’s 10-year outlook still would rack up $14.4 trillion in deficits — most of it on autopilot — even after accounting for that $1 trillion in net deficit cuts from new policies like tax increases on the wealthy and corporations.
The budget request shows the U.S. spending $72.7 trillion over a decade while taking in $58.3 trillion in tax and other revenue. The resulting deficits would swell gross federal debt to $44.8 trillion from about $30 trillion now, per the summary tables put out by the administration.
Annual White House budgets are mere outlines that Congress can, and often does, reject. Still, Biden’s proposal provides some context to his larger fight in trying to revive his stalled economic agenda with trillions in new spending and taxing on climate change, health care and other priorities.
Every $1 trillion in 10-year tax hikes that emerges from negotiations among Democrats would amount to less than a 2% hike in federal revenue. And every $1 trillion chunk of spending over a decade would amount to less than 1.5% of Biden’s planned budget.
Much of the government’s spending and taxing happens mostly automatically every year with Congress letting entitlement programs like Social Security and Medicare grow without intervention. Just $18.8 trillion of that $72.7 trillion in proposed spending would come from discretionary accounts passed each year by Congress, including $8.5 trillion for Defense.
Social Security alone is projected to spend $17.2 trillion over the decade and is projected to exceed all annual discretionary spending by 2030. Medicare spending would take up another $12 trillion. Other major outlays include the Medicaid program and interest on the country’s debt.
The administration is also touting the fastest reduction in deficits in history in this fiscal year. That’s true, with two things primarily shrinking the red ink: Expiration of emergency pandemic relief and stimulus programs, and a growing economy resulting in a revenue surge.
The deficit will be cut this year nearly in half from a little less than $2.8 trillion in fiscal 2021 to a bit more than $1.4 trillion this fiscal year ending Sept. 30 and to less than $1.2 trillion next year, according to Biden’s budget figures. Deficits would then start creeping back up.
— With assistance from Erik Wasson
