WASHINGTON—President Biden’s $6 trillion budget proposal unveiled Friday charts his vision of an expansive federal government role in the economy and the lives of Americans, with big increases in spending on infrastructure, public health and education along with tax increases on corporations and the wealthy.
The Biden administration is seeking $1.52 trillion for spending on the military and domestic programs in fiscal year 2022, which begins Oct. 1, an 8.6% increase from the $1.4 trillion enacted last year, excluding emergency measures to combat the Covid-19 pandemic.
The proposal would shift more federal resources from the military, which would see a 1.6% rise in spending next year, to domestic programs such as scientific research and renewable energy, which would receive 16.5% more funding under the president’s plan in 2022.
The White House also detailed costs for its proposals to spend $4.5 trillion over the next decade on infrastructure and social programs, which the administration is hoping to advance through Congress this summer. The plan would provide $17 billion next year for infrastructure improvements, including repairs to roads, bridges and airports, $4.5 billion to replace lead water pipes across the country, and $13 billion to expand high-speed broadband.
Plans to provide universal preschool and ensure teachers at those schools earn $15 an hour would cost $3.5 billion in 2022. The budget would also provide $8.8 billion next year on direct spending on families, including $6.7 billion for affordable child care, and $750 million for paid leave, the costs of which would rise substantially in 2023 and beyond.
“Put together, this budget is an agenda for durable economic growth and broadly shared prosperity,” Shalanda Young, the acting director of the Office of Management and Budget, said on a call with reporters Friday. “It will deliver a strong economy now and for decades.”
The plan relies on corporate tax increases to pay for infrastructure and taxes on high-income households for the family-spending and education initiatives. The corporate tax rate would climb to 28% from 21%, the top capital-gains tax rate would go to 43.4% from 23.8% and unrealized gains would be taxed at death, with a $1 million per-person exemption.
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Those changes would reverse many of the tax cuts that Republicans enacted in 2017. The administration is also proposing a rewrite of the international tax system, including limits on deductions for companies that send profits to countries without minimum taxes, a plan that would raise $390 billion over a decade.
The budget plan also includes $80 billion in additional spending at the Internal Revenue Service and new rules requiring banks to report flows in accounts. Those changes are projected to raise about $700 billion as tougher enforcement curbs tax dodging.
Ms. Young also pushed back against Republican criticism that the plan would worsen the country’s fiscal picture by dramatically increasing deficits and debt over the coming decade.
The budget plan projects a deficit of $1.84 trillion in fiscal 2022, which comes to 7.8% of gross domestic product, down from a deficit of $3.67 trillion in fiscal 2021, when emergency government spending to battle the Covid-19 pandemic and its economic fallout added to the red ink.
Debt held by the public would rise to 111.8% in 2022, surpassing the level seen in the wake of World War II. Debt would continue to rise in the following years, reaching 117% of GDP in 2031.
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