President Biden’s newly proposed budget for the 2024 fiscal year will lead to a “record” national debt, a watchdog has warned.
The Biden administration submitted the new proposal on Thursday, which outlines the president’s economic, education, climate, and healthcare goals across the next decade. But, the Committee for a Responsible Federal Budget warns the budget would result in the country’s debt rising from 98 percent of GDP at the end of 2023 to 106 percent by 2027 and then 110 percent by 2033.
According to their analysis, despite some attempts at deficit reduction, nominal debt would nearly double, growing from $24.6 trillion to $43.6 trillion over the next decade.
“Debt under the President’s budget would grow to a new record as a share of the economy over the next decade,” the CRFB wrote in an analysis.
“This budget falls well short of the deficit reduction needed to put the nation on a sustainable fiscal path,” the watchdog continued. “We are disappointed that the spending cuts in this budget – given the massive spending growth in recent years – amount to less than 1 percent of the budget and are coupled by four times as much in spending increases. We are pleased the budget begins to address Medicare but extremely disappointed it neglects Social Security, putting seniors’ benefits at risk.”
President Biden repeatedly defended his budget on social media Thursday, calling it a budget “for the middle class.”
“With my budget, we can reduce child poverty and increase child opportunity,” he added. “To support working parents, my budget expands access to affordable, high-quality child care for millions of families. And it invests in paid family and medical leave, so we will no longer be the only major economy without national paid leave.”
The CRFB report notes the deficit would also grow $17 trillion in that span as spending would reach 25.2% of GDP while revenue would top out at 20.1% by 2033. These figures eclipse the 50-year historical spending average of 21.0% of GDP and the revenue average of 17.4%.
The CRFB analysis applauded the budget’s uniquely idyllic deficit reduction of $2.8 trillion via new spending and tax breaks but said it “relies on somewhat optimistic economic assumptions” in its projected growth.
“The President deserves credit for putting forward $3 trillion of deficit reduction, which could be an achievable near-term bipartisan goal in upcoming negotiations. However, deficit reduction will ultimately need to be nearly three times that large, and it is disappointing the budget has put forward so many costly proposals without first putting the nation’s fiscal house in order,” the CRFB said.
These assumptions include “stronger long-term growth, lower unemployment, and lower long-term interest rates” than those proposed by the Congressional Budget Office (CBO), which are an assumed 0.4% growth this year, 2.1% growth next year and 2.2% growth by the end of the decade — contrasted to the CBO’s 0.1% predicted growth this year, 2.5% growth next year and 1.7% by the end of the decade.
A breakdown of the proposed budget showed most of the federal spending coming from expanding access and funding for Pre-K and child care services, totaling $600 billion over the next decade.
Other spending costs come from establishing national paid family and medical leave ($325 billion), offering “free” community college and increasing other higher education spending ($217 billion), and supporting affordable housing policies ($105 billion).
The budget also bolsters the Affordable Care Act and national healthcare services by expanding and extending ACA subsidies and coverage ($185 billion) and increasing other healthcare and long-term care spending ($309 billion).
The budget also intends to expand the Child Tax Credit (costing $435 billion) and the Earned Income Tax Credit ($156 billion).
Cost savings and spending reductions come from lower prescription drug and health costs, saving $227 billion over the next decade. It also reduces defense discretionary spending by $211 billion.
The budget also proposes increasing the corporate income tax rate, establishing a new 25% billionaire tax minimum, and reducing “the tax gap,” saving $1.4 trillion, $437 billion, and $119 billion, respectively.
CRFB President Maya MacGuineas opined the budget “does not go far enough” to eliminate record levels of spending and would result in a new record-high debt.
“The President’s budget would borrow $19 trillion through 2033 and increase the debt-to-GDP ratio from 98 percent at the end of 2023 to 110 percent by 2033, past the record set in this nation just after WWII,” MacGuineas said in a statement Thursday. “It would spend $10.2 trillion on interest payments on the national debt alone – more than it will spend on defense or Medicaid over the same time period.”
MacGuineas added: “Most of this massive borrowing is the result of policies put in place years ago by Democratic and Republican administrations and Congresses alike, but it will require presidential leadership to enact real changes, and this budget does not go nearly far enough to make reining in our dangerous debt levels a top national priority.”
Republican lawmakers have criticized the budget proposal, saying it generates “taxes, taxes, and more taxes” and offers spending increases would worsen inflation in America.