Biden's 100 days in office: Dems ramp up spending as US deficit surges
Pandemic-related spending in the US hit $6T this year
What to expect from the Biden infrastructure spending plan
American Action Forum President Douglas Holtz-Eakin discusses how the infrastructure plan will be paid for and how it will impact the U.S.
President Biden is approaching the 100-day mark of his time in office, a roughly three-month period dominated by the coronavirus pandemic, the ensuing economic turmoil that accompanied it and a torrent of increased federal spending by Democrats.
As a candidate and incoming president, Biden pledged to take swift action to tackle the crisis, including the millions of out-of-work Americans, the surge of COVID-19 cases nationwide and a fresh wave of state-mandated business shutdowns. Following his inauguration, the president and Democrats set off on a two-month sprint to pass the administration's $1.9 trillion coronavirus relief plan.
US DEFICIT SOARS TO RECORD $1.7T IN SIX MONTHS, FUELED BY COVID RELIEF SPENDING
Democrats muscled the package – known as the American Rescue Plan – through Congress without a single Republican vote using a procedural tool known as budget reconciliation. The measure included a $1,400 stimulus check for many Americans and an extension of a $300 weekly unemployment aid supplement through Sept. 6, as well as a generous one-year expansion of the child tax credit. It also provided hundreds of billions of dollars in funding for state and local governments, vaccine distribution efforts and small businesses still reeling from the pandemic.
The package pushed pandemic-related spending in the U.S. to nearly $6 trillion, or roughly 27.1% of the nation's GDP, a level that is entirely without precedent.
During the 2008 financial crisis, for instance, the Obama administration approved a relief package roughly half the size of the American Rescue Plan, and a fraction of overall relief efforts this year and last. And President Franklin Delano Roosevelt's New Deal — arguably the biggest welfare push in modern U.S. history — would have cost have $653 billion in 2009, according to the St. Louis Federal Reserve.
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Lawmakers had already approved about $4.1 trillion in relief measures under former President Donald Trump, according to a COVID-19 money tracker published by the Committee for a Responsible Federal Budget.
To put that into perspective, the U.S. has spent roughly the same amount of money in the past year to confront the duel health and economic crises than it did on every war across the world in the wake of the Sept. 11 attacks (about $6.4 trillion), according to one analysis conducted by Brown University's Watson Institute of International and Public Affairs.
The exorbitant level of spending caused the nation's deficit to surge to a record-shattering $1.7 trillion for the first half of the 2021 fiscal year. The deficit for the first half of the budget year, from October through March, was up from $743.5 billion in the year-ago period, the Treasury Department said at the beginning of April.
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And even though the national debt is on track to hit $30 trillion by the end of 2021, Biden and congressional Democrats are plowing ahead with attempting to pass the president's nearly $4 trillion Build Back Better agenda.
The first part of the proposal, dubbed the American Jobs Plan, would cost about $2.25 trillion and would make massive investments in the nation's roads and bridges, as well as transit systems, green energy, elder care and electric vehicles. It would be paid for over 15 years by raising the corporate tax rate to 28% from 21% and imposing a higher minimum on U.S. companies' foreign earnings.
Biden is expected to release the second part of his proposal, known as the American Families Plan, before his address to a joint session of Congress on Wednesday. That measure, which could cost upward of $1.5 trillion, would focus on domestic priorities such as child care and paid family leave. It would be funded by raising taxes on wealthy Americans, including restoring the top marginal tax rate to 39.6%, where it sat before Republicans' 2017 tax overhaul, taxing capital gains as ordinary income above $1 million and eliminating the stepped-up basis at death.
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Both proposals face a steep hill to passage in Congress, with Republicans and some moderate Democrats wary of such expansive tax hikes while the economy is still not fully recovered from the pandemic.