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Biden-Harris Federal Spending

In the past two months, US President Joseph R. Biden Jr has hit the headlines while addressing his fellow nationals about the proposed ambitious federal budget. “I think it’s about time we started giving tax breaks and tax benefits to working-class families and middle-class families, instead of just the very wealthy,” Biden said. He highlighted that he’s not “anti-corporate”, but “it’s about time they started paying their fair share”. He emphasized that "trickle-down economics has never worked" and that "it’s time to grow the economy from the bottom up”.

The above statements might make one wonder why, all of a sudden, the most powerful man on the earth has to engage with the common public and propagate and advertise the usual event of the annual Federal Budget. This article attempts to elucidate the intricate details of the annual budget proposed by the Biden-Harris Administration.

Economic status on the eve of Biden-Harris inauguration:

The unemployment rate in February 2020 of the Trump presidency dropped to a 50-year low of 3.5%. Furthermore, the onset of the Covid-19 pandemic soon ravaged the economy, driving businesses, both small & large, across the nation to shut down. The unemployment rate shot up to 14.7% in April. It withdrew to 6.7% before Trump left office but remained well above the 2016 level of 4.8%. Trump left behind the worst labour market in modern US history.

The American Rescue Plan of 2021:

Given the grim circumstances existing due to Covid, Biden, on January 14, 2021, declared a $1.9 trillion economic stimulus bill. It was explicitly directed at improving the progression of the pandemic and, transferring immediate relief to American workers, and formulating a bridge to an even-handed economic recovery.

The principal aims of the COVID-19 Stimulus Package included mounting a national vaccination program containing the COVID-19 outbreak and safely reopening schools. It additionally aimed at delivering immediate relief to the American families bearing the brunt of this crisis. It included giving working families a $1,400 per person check and extending current unemployment insurance benefits and eligibility to September 6. It also involved encouraging Americans to stay at home by rendering emergency aid to cover back rent and manage mortgages, increasing the Child Tax Credit from $2,000 per child to $3,000 per child, and allowing 17-year-olds to qualify as children for the year.

The rescue plan also emphasized supporting struggling communities by providing emergency grants, lending, and investments to hard-hit small businesses so they could rehire and retain workers and acquire health and sanitation equipment. Another priority was the distribution of more than $360 billion in emergency funding for state, local, territorial, and tribal governments to ensure that they are in a position to keep front line public workers employed and paid.

If one recollects the 2020 election campaigns, they will recall Donald Trump vehemently accusing Biden of being a helpless puppet of the radical left. He had further added that "He’s not radical left. I don’t think he knows what he is anymore. But he’s controlled by the radical left.”

Fast forward to the last week of May 2021, Joe Biden released his first annual budget. A whopping $6 trillion spending plan that brings massive tax increases for wealthier Americans. The bumper plan includes enormous distinct social programmes accompanied by investments in the battle against climate change, among many other things.

This massive federal spending has clearly shown how the Democratic party’s centre has turned left. The spending levels for several items like education proposed by the Biden administration are well above what Democratic candidates introduced four, eight, or 12 years ago. The policies of left-leaning leaders like Bernie Sanders and Elizabeth Warren, too, have had an impact on the spending plan. The details of the budget undoubtedly are a reflection of Biden's left-leaning outlook.

The budget message of the president begins on quite an optimistic note. "Where we choose to invest speaks to what we value as a Nation.

This year’s budget, the first of my Presidency, is a statement of values that define our Nation at its best".

The budget revolves around the fact that the long-held belief of trickle-down economics has never worked. It is simply a reflection of the idea that the most excellent way to expand the economy is not from the top-down but from the bottom up and the middle-out.

Through the earlier discussed American Rescue Plan, the US responded to the looming emergency and granted urgently needed assistance to hundreds of millions of Americans. With the provisioned resources, the US administration believes that they have ensured an 'equitable economic recovery'. In Biden's first 100 days, more than 1.5 million jobs have already been created, perhaps the most in the first 100 days of any President on record. However, Biden had not adequately acted on his campaign promise of building back better yet.

Therefore, to actually get started, he placed his maiden budget. Washington has proposed two plans effectively blended together. Viz, American Jobs Plan and the American Families Plan.

American Jobs Plan

Biden has put forth a grand multi-trillion-dollar infrastructure and jobs investment over eight years. The administration proposes funding for it by what they call a Made in America Corporate Tax Reform Plan over the upcoming decade and a half.

The plan intends to put millions of Americans to work and rebuild American transportation, water, and broadband connectivity infrastructure. It also aims at building a clean energy future while investing in communities at risk of being left behind during the energy transition. The plan holds immense promises for the American workers and the American farmers through attempts to seize climate change. The scheme also aims at the creation of new and better jobs for caregiving workers. Infrastructure spending on two fronts: transportation and community get the most significant share, $1.3 trillion. The balance, more than $980 billion, involves investments in research and development, workforce development, manufacturing, and eldercare.

American Families Plan

The American Families Plan targets four of the most significant challenges threatening American families by setting the foundations for individual, family, community, and national success tomorrow. The proposal seeks $1 trillion in federal spending on programs and $800 billion in tax cuts, complementing the American Jobs Plan.

The plan guarantees four additional years of education for every American, beginning with two years of universal high-quality pre-school for every 3- and 4-year old in America and adding two years of free community college. It would make college more affordable and tackle equity gaps. It provides access to quality and reasonable child care to low- and middle-income families and expanded access to healthy meals.

Proposals to reinvest in the expansion of economic opportunity, improvement of education, tackling the climate crisis, and ensuring a vigorous national defence while reclaiming America’s place in the world have also been included. A $1.5tn request for functioning expenses for the Pentagon and other government departments also finds itself in the budget documents.

President Biden plans to back his agenda by hiking taxes on corporations and high earners, and the papers show budget deficits contracting in the 2030s. The budget, if passed, would set the US on track for the highest spending as a percentage of the economy in history. Under the plan, debt would reach 117% of GDP by 2031, surpassing levels during World War Two. That would be despite the earlier mentioned proposed tax increases on corporations, capital gains and the top income tax bracket amounting to at least $3tn.

Many economists have warned against such massive government spending saying that it could drive up inflation, forcing the Federal Reserve to raise interest rates and, therefore, heightening the risk of a recession.

The budget is solely a call to Congress, which must sanction federal spending. Congress has until the end of September to pass new spending bills. If they fail to do so, the US could be looking at a partial government shutdown.

Getting the plan cleared from Congress will not be an easy task. The Democrats hold a narrow majority in the House and a bare one-seat advantage over Republicans in the 100-seat Senate. Budget measures require just 51 votes instead of the 60 in the Senate to get clearance.

Republicans have heavily reprimanded the Biden Federal Budget. Republican Senator Lindsey Graham went on record to denounce it as "insanely expensive". The administration, therefore, has to rely on the support of the entirety of the Democrats, especially in the Senate. However, ensuring all Democrats to be on board won't be simple either.

The Biden-Harris administration is up for a bumpy ride and is looking forward to remarkably complicated negotiations, consultations and compromises in the upcoming weeks.


Written by: Gaurav Chakraborty (

Edited by: Divij Gera


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