Democrats Push to Borrow More Money as Deficit Is Set to Shrink Slightly in 2021
WASHINGTON – As top Democrats continue the $ 1.9 trillion economic aid package through the House, some legislators and President Biden The president raised the possibility of borrowing even more funds to finance the next set of spending plans, on infrastructure, based on new projections that showed the country’s fiscal picture was not as gruesome as officials slashed. Was expected
On Thursday, the Nonpartisan Congressional Budget Office released updated forecasts, showing a $ 2.3 trillion deficit for the 2021 fiscal year, lower than last year’s $ 3 trillion deficit but the second-highest since World War II . While that launch did not include Mr Biden’s stimulus proposal, Democrats, looking at the report to give him room to borrow more money, said it would have presented a longer-lasting economic picture than last fall is.
Expected economic recovery flows from an economy Faster recovery from officers than before, Thanks to the ability of American businesses to adapt Coronavirus epidemic And trillions of lawmakers approved last year, including $ 900 billion in December. The Budget Office speculated that a rapid rebound from the depths of the recession would bring in more tax revenue and increase the total volume of goods and services churned by the US economy, compared to its earlier forecasts.
Mr. Biden and his party want to take trillions of debt this year in hopes of arresting the epidemic more quickly and economic growth becoming stronger. A bill based on the president’s $ 1.9 trillion plan to expand food stamps and unemployment benefits, sending $ 1,400 per person payments to most American families and accelerating vaccine deployment and testing for advanced viruses in several House committees this week Bring, floor vote by end of target month for party leaders.
The president, eager to pursue his policy agenda, held a meeting with key senators from both sides at the White House on Thursday morning, in which he said he would discuss a broader infrastructure bill to be proposed after approving virus assistance. do. Mr. Biden promised in his campaign that such a bill, which could cost trillions of dollars, could be paid by raising taxes on corporations and high earners, steps that would gain widespread Republican support for the measure. Will ruin any possibility of doing.
In recent times, Biden administration officials and a top Congress Democrat have opened the door to an infrastructure bill that is not offset by tax hikes and instead increases the budget deficit further, which they hope will bring more Republican support. Can.
Richard E., a Democrat representative from Massachusetts and chairman of the Methods and Means Committee. Neil said in an interview on Thursday that there could be a “tax increase” in the infrastructure bill this spring.
But then he did the Federal Reserve chair Jerome H. Cited Powell, who Gave a speech on wednesday Reiterating that the Fed planned to keep interest rates low for the foreseeable future, it said that now was not the time to worry about losses. Democrats have welcomed those comments as an incentive to continue spending deficit to ease the recovery.
“There are many opportunities to take loans here,” Mr. Neil said.
He said there was “alignment with a Republican chairman of the Federal Reserve Board here – and I think, quietly, a lot of Republicans, too – it’s time to grow up.”
Mr. Powell did not endorse any specific spending plan in his speech on Wednesday. But he said that while the federal budget was not on a sustainable path, and fiscal policymakers would need to go back to that question, “however, now is not the time to do so.” He suggested that the short-term deficit remained an “essential tool” for spending recovery.
Mr. Biden’s colleagues have worked to gather an infrastructure proposal before inauguration day, hoping to include rural broadband, expansion of road and bridge repairs, one and a half million charging stations for electric cars and other projects Is that the administration promises to create millions for jobs. “
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The president discussed those plans with Vice President Kamala Harris on Thursday; Pete Batigi, Secretary of Transportation; And two Republicans, Shelley Moore Capito of West Virginia and James M. of Oklahoma. A quartet of senators including Inhofe.
Mr. Biden proposed a tax increase to pay those plans during the campaign, but in recent times, some of his economic aides have privately indicated that some of the infrastructure packages could be financed. is.
Some fiscal hawkers in Washington on Thursday warned lawmakers that borrowing for infrastructure would increase the risk of future debt woes.
“We understand and share a desire to make significant public investment and overcome income inequality,” said Maya McGinnas, chairman of the committee for a responsible federal budget. “But we shouldn’t tell our children to spend it all when we’re already leaving them a record mountain of debt. We should pass a proper Kovid relief package, pay for the new spending initiative And then work together to bring long-term debt under control. “
Even before the epidemic hit, the budget shortfall – representing the difference between what the United States spends and what it collects through taxes and other federal revenues – President Donald J. Under Trump exceeded $ 1 trillion annually. The republic passed in 2017 as a result of a large tax-cut package, and a series of bipartisan expenses resulted in losses under his watch.
The budget deficit has led to post-World War II records, in size and as a part of the economy, in the 2020 fiscal year, with Mr. Trump and Congress agreeing on trillions in spending programs and tax cuts, so that people and Businesses have to work hard. From the epidemic recession.
Those efforts resulted in an increase in total debt compared to the size of the nation’s economic output last year and a decline in tax receipts amid the recession.
New estimates from the Budget Office show that debt has been steadily increasing, but at a slower pace than officials in September. The office now estimates federal debt to reach 105 percent of the nation’s economy by 2030. This is below the September forecast of 109 percent. The report now estimated the deficit to be slightly less than $ 1 trillion in the 2023 and 2024 fiscal years, before rising again in the second half of the decade. From 2021 to 2031, the deficit is estimated to average $ 1.2 trillion per year.
Officials at the budget office also said Thursday that several federal trust funds, including those for social security and the nation’s highways, were now expected to remain solvent longer than office in times of decline.
Some Republicans have criticized Mr. Biden’s proposal for economic aid so that the deficit would increase substantially. In recent committee hearings aimed at concretizing the details of Mr. Biden’s plan, Republicans have fought to reduce the size of the bill through a series of largely unsuccessful amendments that reduced spending levels Or may force additional parameters to be aided. .
“This nearly $ 2 trillion stimulus package is neither targeted nor an incentive,” said Kevin Brady of the Republic of Texas, representative of the House Ways and Means Committee. Like many Republicans on Capitol Hill, he said Democrats were prepared to unilaterally pass the package through a complex budget process known as reconciliation. (Republicans used the process twice in 2017, over similar Democratic complaints, unsuccessfully attempting to pass Mr. Trump’s tax cuts and repealing the Affordable Care Act.)
Progressive Democrats have struggled to keep aid as strong as possible, and to incorporate a range of longstanding liberal priorities that the Republican-controlled Senate passed either as a stand-alone bill or as part of a previous relief package Failed In particular, party leaders are slowly increasing the federal minimum wage from $ 7.25 to $ 2025, despite potential procedural hurdles in the upper chamber.
The Liberal Democrats, including Washington state Representative Pramila Jaipal, chair of the House Progressive Caucus, have so far won the bill to maintain wage increases and the $ 75,000 income limit for Americans in which it is set That Americans receive $ 1,400 per person per person is direct payment.
Ms. Jaipal said in an interview, “When we take these two things into account, we take this as an incredible victory, we have to make sure that they remain all the way through the House and Senate.”
At separate news conferences on Thursday, California Speaker Nancy Pelosi and New York Senator Chuck Schumer both vowed to keep the majority leader provision in the final package.
Michael D. Sheer And Jenna Smilak Contributed to reporting.