Under the budget, spending would average 24.5 percent of GDP over the 2022-2031 budget window, 1.8 percent of GDP higher than the 22.7 percent of GDP average estimated in OMB’s baseline. The large deficits in the President’s budget reflect both large structural imbalances under current law and, over the first eight years, the fact that President Biden’s proposed new spending will exceed proposed revenue offsets. However, by 2030, the budget would begin reducing deficits, including by $93 billion (0.3 percent of GDP) in 2031 and by about $300 billion (roughly 0.6 to 0.7 percent of GDP) in 2041. Over the decade, deficits would be 0.5 percent of GDP ($1.4 trillion) higher than under OMB’s baseline. As a share of GDP, the deficit would fall from 16.7 percent of GDP in FY 2021 to a low of 4.2 percent of GDP in 2029 before growing to 4.7 percent of GDP by 2031. Specifically, the deficit would fall from $3.7 trillion in FY 2021 to $1.8 trillion in 2022 and $1.3 trillion by 2027 before rising to $1.6 trillion by 2031. Debt in the budget would fall below baseline levels by 2038 and would grow at a slower rate thereafter.Īnnual deficits, according to the budget, would fall in the near term as COVID relief expires but then grow as a result of the President’s spending proposals and underlying pressure from health, retirement, and interest costs. OMB projects debt to reach 113 percent of GDP by 2031 under current law, which is similar to what the Congressional Budget Office (CBO) projects. In nominal dollars, debt would grow by $17.1 trillion through the end of FY 2031, from $22.0 trillion today to $39.1 trillion in FY 2031. Federal debt held by the public would rise from 100 percent of GDP at the end of FY 2020 and a record 110 percent of GDP in 2021 to 114 percent of GDP by 2024 and 117 percent of GDP by the end of 2031. Debt, Deficits, Revenue, and Spending in the President’s BudgetĪccording to its own estimates, debt under the President’s budget would grow substantially over the next decade. However, the budget adds too much to already record-level debt over the next decade and does far too little to address rising structural deficits over the long term. We are pleased that President Biden has put forward important details of his budget plan, that his economic assumptions are reasonable, and that he is proposing to offset new costs over time while modestly reducing long-term deficits. For example, the budget projects real GDP growth would average 1.9 percent in the second half of the decade, compared to CBO’s projection of 1.6 percent and the Federal Reserve’s central prediction of 1.8 percent. Economic assumptions underlying the budget are modestly more optimistic than independent forecasts but do not appear to affect budget outcomes much.The budget would start reducing the deficit in 2030 and beyond. This includes $5 trillion in new spending and tax breaks reflected in the American Jobs Plan, the American Families Plan, and nondefense discretionary spending and $163 billion in net interest costs, partially offset by $3.8 trillion of tax increases and spending reductions. Deficits would be nearly $1.4 trillion above current law over the next decade.This would be higher than the administration’s baseline projection of 22.7 and 18.0 percent of GDP, respectively, and far above both the 50-year averages of 20.6 and 17.3 percent of GDP. Spending and revenue would total 24.5 and 19.3 percent of GDP over the coming decade, respectively.Annual deficits would fall from $1.8 trillion (7.8 percent of GDP) in FY 2022 to $1.3 trillion (4.6 percent of GDP) in 2027 before rising to $1.6 trillion (4.7 percent of GDP) by 2031. Budget deficits would total $14.5 trillion (5.1 percent of GDP) over the next decade.In nominal dollars, debt would grow by $17 trillion, from $22 trillion today to over $39 trillion by the end of FY 2031. Debt would rise from 100 percent of GDP at the end of FY 2020 and a record 110 percent at the end of 2021 to 114 percent by 2024 and 117 percent by the end of FY 2031.Under the plan, the Administration estimates debt would grow to 117 percent of Gross Domestic Product (GDP) by the end of FY 2031, compared to the 113 percent of GDP under the Office of Management and Budget’s (OMB) baseline.īased on the administration’s estimates, our analysis shows that under the budget: The budget proposes significant increases in spending, revenue, and borrowing over the next ten years. The Biden Administration today released its first full budget, laying out its proposals for Fiscal Year (FY) 2022 and the subsequent decade.
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