WASHINGTON — President Joe Biden will propose $5 trillion in new federal spending over the next decade on Friday, part of his fiscal year 2022 budget request, a source familiar with the proposal tells CNBC.
The new spending would be paid for in part by $3.6 trillion in additional revenues over the same period. The result would be a net deficit of $1.4 trillion, which would begin shrinking after 2030.
Biden will include $300 billion of the $5 trillion total in his budget request to Congress for fiscal year 2022. This will bring the president’s total budget request for next year to $6 trillion, the source said.
Biden’s budget also projects that inflation will reach no more than 2.3% annually over the next 10 years, reflecting the administration’s belief that concerns among some economists about runaway inflation are overblown.
Like in all presidential budgets, the vast majority of the money in Biden’s 2022 budget request will be spent on programs that the federal government is obligated to fund, including Medicare, Medicaid and Social Security.
Beyond those, Biden has requested $1.5 trillion in discretionary funds, half of which is slated for defense.
The president’s new spending, the $5 trillion over 10 years, is intended to fund the twin pillars of his sweeping domestic agenda: the American Jobs Plan and the American Families Plan.
The former would make major investments in both traditional infrastructure and in green technology, which Biden argues is crucial to making America competitive in the global economy. It would also shore up the U.S. electrical grid, expand broadband access and bolster care for the elderly and disabled.
This second piece contains additional funding for two years of free universal pre-K and two years of free community college. It also funds heavily subsidized child care for middle-class families, federal paid family leave and expanded child tax credits.
The combined cost of these two programs is $4.1 trillion over the next decade and would be paid for primarily through higher taxes on corporations and the wealthiest taxpayers.
The White House is currently negotiating with Senate Republicans on a potential bipartisan infrastructure deal, but this negotiation is separate from the FY 2022 budget request.
Presidential budgets are typically one part plan and one part wish list, designed to illustrate the president’s policy priorities as much as they are to inform congressional appropriators.
Presidential budget requests are also dependent upon Congress to pass them. But with Democrats in control of both chambers this year, Biden has a far better chance of seeing his budget enacted into law than most of his recent predecessors.
In former President Barack Obama’s final year in office in 2016, Republicans who controlled both the House and Senate disregarded his budget altogether.