Biden’s budget proposal is ‘the most reckless fiscal policy in the last half-century’: economist
President Joe Biden’s first 100 days in office have been dominated by government spending proposals.
On Friday, Biden unveiled his $1.5 trillion “skinny budget” – a precursor to the full annual budget. It comes on top of his $1.9 trillion COVID-relief package and his $2.3 trillion infrastructure proposal.
Tyler Goodspeed, former acting chairman of the Council of Economic Advisers under former President Trump, told Yahoo Finance Live all that spending is not prudent at a time when the U.S. budget deficit continues to widen to unprecedented levels.
“I’m an economic historian, and I think we are looking right now at the most reckless fiscal policy in the last half century,” said Goodspeed, the Kleinheinz Fellow at the Hoover Institution at Stanford University.
Biden’s first budget proposal as commander-in-chief is largely a reflection of his key agenda items. It devotes a significant portion of funding to education, climate change, public health research, civil rights, and battling the opioid crisis.
Specifically, it includes $103 billion for the Education Department, a 41% increase over the 2021 enacted level, an increase of $14 billion to fight climate change, $10.7 billion to combat the opioid crisis, and $8.7 billion for the CDC to prepare for future public health crises.
“With this so-called skinny proposal, we’re seeing a proposed increase in non-defense discretionary spending of 16%, it’s highest level as a share of the economy since 1965,” Goodspeed said. “And Democratic leadership in Congress has been cleared to pass another reconciliation bill this year, so I think that we are in unprecedented territory when it comes to fiscal policy.”
Under Biden's proposed budget, defense programs would grow by 1.7%, less than many Republicans wanted, but more than some Democrats who were calling for cuts to military spending. Goodspeed said now is not the time to skimp on defense spending — especially with China as a growing threat.
“The People’s Republic of China has become a global superpower with capacities for surveillance and technological disruption that their Soviet predecessors would have marveled at,” he said. “In the context of that security threat, we ought to be thinking 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 is not going to be a recovery in the U.S. economy until there’s a recovery in the U.S. labor market.”
He cautioned Biden against trying to roll back a signature Trump achievement — the 2017 Tax Cuts and Jobs Act, which among other things, lowered the corporate tax rate for businesses.
“Make sure that the incentives are in place for employers to continue hiring, and make sure that we are not imposing unduly high implicit marginal tax rates on the return to work” he said.
Biden is expected to release a more detailed budget proposal later this spring, but this initial blueprint is the first step in the federal budgeting process.
Alexis Christoforous is an anchor at Yahoo Finance. Follow her on Twitter @AlexisTVNews.
