“We’re a really big economy where really big forces are taking shape for GDP growth,” said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution and a former chief economist at the CBO.
Even these liberal estimates of the Biden administration mean that its policies would increase the growth in economic activity by a few tenths of a percent every year over a decade. This is important when comparing it with the growth that would be expected only by looking at demographic factors and historical averages of productivity growth. The forecast about Mr. Biden’s policies is more naturally optimistic – and his ability to increase productivity and size of the work force – may seem prima facie.
- A new year, a new budget: The 2022 fiscal year for the federal government begins October 1, and President Biden has revealed what he intends to spend ever since. But any expenditure requires the approval of both houses of Congress.
- Ambitious Total Expenses: President Biden would like the federal government to spend $ 6 trillion In the 2022 fiscal year, and by 2031, total spending to grow to $ 7.2 trillion. This would take the United States to its highest sustained level of federal spending since World War II, while decreasing more than $ 1.3 trillion over the next decade.
- Infrastructure Planning: The budget outlines the President’s desired first year of investment: American Jobs Plan, Who wants to give money to improve roads, bridges, public transport even more With a total of $ 2.3 billion over eight years.
- Family Plan: The budget also addresses other major spending proposals that Biden has already started, his American Family Plan, Aimed at strengthening the United States’ Social security net By expanding access to education, reducing childcare costs and helping women in the workforce
- Compulsory Program: As always, mandatory spending on programs such as Social Security, Medicaid and Medicare is an important part of the proposed budget. They are increasing as America’s population ages.
- discretionary spending: Funding for Personal budget Of Agencies and programs Under the executive branch will reach approximately $ 1.5 trillion in 2022, a 16 percent increase from the previous budget.
- How Biden will pay for this: The President will fund his agenda on a large scale Tax increase On corporations and High earner, Which will start reducing the budget deficit in the 2030s. Administration officials have said that the tax hike will completely phase out the plans for jobs and families over the course of 15 years, which the budget request backs up. Meanwhile, the budget deficit will be above $ 1.3 trillion every year.
“Claiming that your fiscal policies will boost growth by four-tenths of a point seems optimistic, but I can see how they could get there,” she said.
Former top Obama administration economist Jason Furman said: “I think there’s a problem in people’s heads – more extraordinary ideas about what economic policy can do and how quickly it can do it. When you try to increase productivity When you are talking, you are talking about compounding which becomes a big thing for a long time. “
In other words, the difference of a few tenths of a percent of GDP growth may not be very high for a year, but the size difference that persists for many years has a large impact on the standard of living.
Some policies of the administration will, by design, focus on the long-term impact on the country’s economic potential. For example, the extra money for community colleges can actually reduce the size of the labor force, and thus the GDP, in the short term if more adults go back to school. But after that the productive capacity of those workers will increase, and thus contribute to the development for decades to come.
Conservatives, for their part, see the Biden agenda as likely to stall growth, particularly once tax increases and new regulatory actions are implemented. Trump’s adviser, Mr. Mulligan, said he believed the Biden agenda would reduce the nation’s development path by about 0.8 percent per year compared to the Trump-era trajectory. Douglas Holtz-Eakin, president of the American Action Forum, said he thinks Mr. Biden’s policies could lead to faster growth in the short term but slower growth in the long run due to taxes and spending.