Biden’s budget proposal is ‘the most reckless fiscal policy in the last half-century’: economist
President Joe Biden's first 100 days were filled with proposals for government spending.
On Friday, Biden unveiled his "tight budget" of $ 1.5 trillion - a forerunner to the total annual budget. It comes on top of its $ 1.9 trillion COVID relief package and its $ 2.3 trillion infrastructure proposal.
Tyler Goodspeed, former acting chairman of the Council of Economic Advisers under former President Trump, told Yahoo Finance Live that spending is not prudent at a time when the U.S. budget deficit continues to climb to unprecedented levels.
"I'm an economic historian, and I think we're looking at some of the most ruthless fiscal policies in the last half century," said Goodspeed, Kleinheinz Fellow at Stanford University's Hoover Institution.
Biden's first budget proposal as Commander-in-Chief largely reflects his key agenda items. It provides a significant portion of the funding for education, climate change, public health research, civil rights and fighting the opioid crisis.
Specifically, it includes $ 103 billion for the Department of Education, a 41% increase from levels decided in 2021, a $ 14 billion increase to tackle climate change, $ 10.7 billion to tackle the opioid crisis and $ 8.7 billion for the CDC in preparation for future public health crises.
"With this so-called skinny proposal, we see a proposed 16% increase in non-defense discretionary spending. This is the highest percentage in the economy since 1965," Goodspeed said. "And the democratic leadership in Congress has been cleared to pass another reconciliation bill this year. I think we are in unprecedented territory when it comes to fiscal policy."
The Pentagon building is located in Arlington, Virginia, USA on October 9, 2020. REUTERS / Carlos Barria
Under Biden's proposed budget, defense programs would grow 1.7%, less than many Republicans wanted but more than some Democrats who were calling for cuts in military spending. Goodspeed says now is not the time to cut defense spending - especially given the growing threat from China.
"The People's Republic of China has become a global superpower with surveillance capabilities and technological disruptions that its Soviet predecessors would have been amazed at," he said. "In the context of this security threat, we should think very, very carefully about whether or not the Department of Defense is adequately funded."
Goodspeed said he would advise Biden to focus federal spending on job creation because "there will be no recovery in the US economy until the US labor market recovers".
He warned Biden against undoing a Trump success - the 2017 Tax Cuts and Jobs Act, which, among other things, lowered the corporate tax rate for businesses.
"Make sure that there are incentives for employers to keep hiring and make sure we don't impose excessively high implicit marginal tax rates on return to work," he said.
Biden is expected to publish a more detailed budget proposal this spring. However, this first draft is the first step in the federal budget process.
Alexis Christoforous is an anchor at Yahoo Finance. Follow her on Twitter @AlexisTVNews.
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