President Joe Biden’s proposed $6 trillion spending plans are in jeopardy. This is according to Acting White House Budget Director Shalanda Young, who testified before a Senate committee on Tuesday.
Young made the remarks during a Senate Budget Committee hearing on President Joe Biden’s financial year 2022 proposed budget; this proposed budget keeps calling for a sharp increase in non-defense domestic spending while raising taxes on companies and the richest Americans and beefing up IRS implementation to combat tax evasion.
Shalanda Young at @SenateBudget hearing talks about how the President's Budget reduces deficits over the long-term. The budget reduces deficits after 2030 and saves over $2 trillion in the second decade
— Tyler Evilsizer (@TylerEvilsizer) June 8, 2021
Biden’s $6.01 trillion budget proposal includes the $2.3 trillion American Economic Plan and the $1.8 trillion American Families Plan; this comes along with $1.5 trillion in expenditures and various obligatory expenditure programs for fiscal 2022.
The strategy forecasts $4.17 trillion in revenue, with a $1.84 trillion deficit—a significant decrease from the previous two years due to the COVID-19 epidemic, but an increase from 2019’s $984 billion.
It proposes a $2 trillion increase in business taxes, including a corporation rate rise from 21% to 28% and the restoration of the richest tax bracket from 37% to 39.6%. Richer individuals’ tax rates would rise and inherited capital gains would no longer be tax-free.
— House Budget Committee (@HouseBudgetDems) June 7, 2021
Will it Work?
Biden’s ability to carry out his agenda will be determined by Congress which consistently disregards the White House’s budget proposals in favor of their own. Biden’s proposal has been criticized by Republicans; several Democrats have also raised qualms about his plans to raise taxes on businesses and high-income people.
In her testimony, Young acknowledged the Capitol Hill dynamic. He stating that if the Senate doesn’t pass the offsets, the spending will be in jeopardy as well and Congress will need to move forward with the entire package, including increased taxes.
— Joe Gould (@reporterjoe) June 2, 2021
Will The Intrest Rates Increase?
Senator Chuck Grassley questioned White House Budget Director Mick Mulvaney about the likelihood of interest rate increases and the implications for debt interest costs.
Brian Riedl, a colleague at the Manhattan Institute, a conservative organization, testified before the House Financial Services Committee. Riedl estimated that increasing interest rates one percent higher than the Federal Budget Office’s current projections would add $30 trillion in interest payments over the next three decades.
Interest rates on benchmark 10-year Treasury notes are expected to average 1.6 percent from 2021 to 2025, and 3.0 percent from 2026 to 2031, according to the CBO. The interest rate on 10-year Treasury notes is expected to grow steadily after 2031, hitting 4.9 percent by 2051, according to the CBO’s projections.
Young stated that the budget was created by taking into account expectations of rising interest rates to levels that are completely in line with market experts’ predictions. Finally, the budget anticipates a $2 trillion deficit reduction over the decade ending in 2031.
At this time, little alignment exists between Biden and the collective congressional body on this matter.