December 6, 2021

Biden’s Budget: What to Expect and What It Means

The White House is set to release its multitrillion-dollar fiscal year 2022 budget Friday. Here is a guide to what the blueprint means—and how it could take on outsize importance this year.

The president’s budget proposal serves as a fiscal blueprint for the administration’s policy priorities and signals to Congress what the White House hopes to accomplish over the coming years. It also provides a detailed look at how the president’s spending and revenue proposals would affect federal deficits and debt. It includes the administration’s assumptions about how those policies would affect economic growth, inflation and interest rates.

How big is the budget and when will it be released?

The White House is expected to release President Biden’s first budget proposal Friday morning. The budget will call for about $6 trillion in spending in fiscal 2022, people familiar with the plan said.

Under the budget plan, the national debt would exceed the record level seen at the end of World War II within a few years and reach 117% of economic output by the end of 2031, up from about 100% this year, these people said.

Why does the budget matter more this year?

Some years, lawmakers skip trying to pass a budget entirely and just move straight to the spending bills needed to fund the government. But this year, Democrats might try to pass legislation under a process tied to the budget known as reconciliation. If Democrats in the House and Senate can pass an identical budget, then they can pass legislation with a meaningful connection to the budget with a simple majority in the Senate, rather than the 60 votes most bills need. That means they can pass legislation without GOP support in the Senate—as they did with the $1.9 trillion Covid relief package passed in March, which was tied to the fiscal year 2021 budget.

Mr. Biden hopes to get GOP support for an infrastructure bill, but if the two sides can’t reach a deal, Democrats might try to pass a sweeping infrastructure, child-care and education package using this process. But none of it is possible if they can’t agree first on a budget.

Republicans used the same process when they passed their overhaul of tax laws in late 2017.

What big priorities are likely to be reflected in the budget?

President Biden’s first budget request will likely reflect many of the priorities he outlined on the campaign trail and in his two proposals to spend more than $4 trillion on infrastructure and social programs. The White House has said its proposal would increase spending on domestic programs, including education, scientific research and combating climate change. Officials said the goal is to make what they called long-overdue investments in core public services and agencies, such as the Centers for Disease Control and Prevention and the Environmental Protection Agency.

How is what is being unveiled Friday different from the skinny budget the White House released earlier?

In their first years in office, recent presidents have typically released a pared-back budget proposal that lays out top-line spending figures and broad policy priorities sometime in February or March, followed by a full budget proposal in April or May.

The Biden White House released its skinny budget April 9, which requested $1.52 trillion in discretionary funding for fiscal year 2022. Friday’s budget will outline spending and revenue plans for the next 10 years, and include more detailed policy proposals, as well as funding requests for every federal agency and program.

Does Congress have to do what the White House asks?

No. Lawmakers routinely ignore the White House’s budget requests in favor of their own plans. The White House budget is generally seen as the opening salvo in the long process that leads to the government being funded.

Does the budget actually fund the government?

No. The budget is a largely symbolic document that maps out a party’s priorities for spending over the next decade. The House and Senate can each pass their own budget with just a simple majority, still no easy feat in the Senate, where that means Democrats can’t lose a single member of their caucus. But the government is actually funded through 12 appropriations, or spending, bills that need to be passed by both chambers of Congress and signed into law by the president.

Those spending bills can be passed along party lines in the House, where Democrats control the majority. But they need 60 votes in the Senate, which is split 50-50. That means Democrats and Republicans will have to agree on what goes in those spending bills.

Do Democrats agree with the president on his budget? What about Republicans?

Democrats agree with a lot of what Mr. Biden is expected to propose in his budget. But one area of contention has been military spending. The White House has said it plans to increase far more funding in nondefense spending, which would see a 16% increase, than on the military, which would rise by 1.7%, but some liberal Democrats want to see military spending cut. This is an area of dispute among Democrats that may be problematic when they try to pass a budget through both the House and Senate.

Republicans have criticized Mr. Biden for spending $1.9 trillion on a coronavirus relief package earlier this year, with trillions more proposed for infrastructure, education and child care. They have said the Covid-19 aid is already causing problems by fueling inflation and potentially incentivizing people receiving unemployment benefits to not return to work.

What is the deadline?

Technically, Congress and the White House have both missed their official budget deadlines. The Congressional Budget Act of 1974 specified that the White House is supposed to submit its budget to Congress on the first Monday in February. Congress, meanwhile, is supposed to pass a budget resolution by April 15. In reality, those deadlines are missed all the time without consequences. The important deadline is when the government’s funding expires at the end of September. If Congress hasn’t passed new spending bills before Oct. 1, the government could partially shut down.

How does the debt limit figure into all of this?

Separate from the federal budget and spending process, Congress this year must also tackle the federal borrowing limit, which has been suspended since December 2019 but is set to return Aug. 1. After that, the Treasury Department won’t be able to tap bond markets to raise new cash to finance government operations unless Congress either raises or suspends the borrowing limit again.

The agency can take steps to conserve cash, but Treasury Secretary

Janet Yellen

has warned those extraordinary measures might not last as long as they have in the past—typically three or four months—because of the uncertainty around government spending and receipts during the pandemic. That means the government could run out of cash around the same time that its annual funding expires, at the end of September.

Government Spending

Read more on state and national budgets, selected by the editors

In his first address to Congress, President Biden called for huge federal investments, including $2.3 trillion in infrastructure and $1.8 trillion in family and education programs. Gerald F. Seib unpacks the four main takeaways from the speech. Photo illustration: Ksenia Shaikhutdinova (Video from 4/29/21)

Write to Kate Davidson at kate.davidson@wsj.com and Kristina Peterson at kristina.peterson@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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