Capitol Report: Cascade of red ink poses risks for Biden’s budget rollout

United States

The Biden White House is slated to release its first big fiscal policy document soon, but critics wonder if it will raise more questions than it will answer.

Between the $ 1.9 trillion coronavirus aid package and Biden’s infrastructure proposal, the administration has not been shy about spending. But how much of what it proposes to spend in coming years will be offset by tax increases or spending cuts elsewhere in the government is unclear.

But that likely won’t be answered when the administration is expected to unveil sometime this week its proposed fiscal 2022 discretionary spending proposals. Annual discretionary funding provides funding for most of the government’s departments and is subject to approval by congressional appropriators.

“I don’t think it helps us very much at all to be honest,” said Douglas Holtz-Eakin, president of the conservative American Action Forum think tank and a former head of the Congressional Budget Offce.

“The central issue is what are they going to assert they get in the way of economic growth out of their combination of the American Rescue Plan, the American Jobs Plan and whatever sequel it might have and how does that fit into some sort of budgetary strategy regarding the structural deficit that we have? And one year of discretionary numbers doesn’t shed light on either of those things,” he said.

Discretionary funding makes up only about a third of annual spending by the government, as Medicare, Social Security and other entitlement programs take up more and more resources.

The OMB document will also be late. Under the 1974 law governing the budget process, the White House’s Office of Management and Budget is supposed to issue the entire budget on the first Monday in February. There’s no penalty, though, for missing that deadline and it has often been missed by incoming new administrations setting up in their first year.

To ease criticism, new administrations have taken to releasing what’s been called an early “skinny budget,” a short summary of proposed discretionary spending for the next budget year, which can be used by lawmakers on Capitol Hill to begin writing the annual appropriations bills.

The Biden OMB’s release will be weeks later than that of the Donald Trump White House, which was criticized for its tardiness. It also raises the prospect that the meat of the budget — line-item breakdowns for agencies and programs, summary tables of spending revenues and deficits for 10 years out, and the economic assumptions used — may not come for some time still.

That led Rep. Jason Smith, the top Republican on the House Budget Committee, to write the White House earlier this month asking it to give a timeline on the full budget.

“In the absence of a budget, Americans are left to wonder how your administration might go about adopting or implementing some of the more sweeping priorities put forward by Democrats — whether it be some variation on the Green New Deal, a Medicare-for-All health-care overhaul, policies that defund the police, weaken America’s national security, or prioritize resources for illegal immigrants over our fellow Americans,” Smith said in his letter signed by other Republicans on the panel.

The administration has blamed the delay in part on what White House spokeswoman Jen Psaki called “a bit of intransigence” from the Trump administration during the transition. In addition, the White House is missing an OMB director, after Neera Tanden’s nomination was withdrawn in the face of opposition from members of both parties in the Senate.

Whenever the budget comes, Holtz-Eakin said he will want to see what kind of targets the White House sets for fiscal policy. Given less daunting budget circumstances (the 2020 deficit was the largest in dollar terms ever and the biggest since 1945 compared to the size of the economy) past administrations have pledged to reach a balance, or cut the deficit in half — or in the case of the Obama administration, shrink the “primary deficit,” the shortfall between spending and taxes minus interest payments.

“I think when they roll out the budget, it’s fair game to ask them what their long-term objective is” Holtz-Eakin said.

“At the end of eight years, what do they want to accomplish — stabilize debt relative to GDP, stabilize interest costs relative to GDP, cut the deficit in half? I don’t know. I’ve just heard nothing in the way of a budgetary north star toward which they’re driving,” he said.