On Friday, Biden proposed to Congress a $6 trillion budget plan for fiscal year 2022, primarily targeting increased spending on infrastructure, education, and combating climate change.
The budget calls for $6 trillion in spending and $4.2 trillion in revenues while projecting a $1.84 trillion deficit. The proposed spending amount is 50% higher compared to pre-COVID-19 levels, but the White House's goal is to take advantage of low borrowing costs to try and boost the economy over the long term.
However, Biden's projections for economic growth in the budget did not match the rapid progress and growth the economy had experienced so far this year, mainly due to a few systemic headwinds such as the rapidly aging US population and the stagnant growth of the workforce.
Growth was projected to be 5.2% this year, falling short of the 6.4% annualized growth the economy experienced in the first quarter. One projection that surprised many observers was the degree to which the Administration expects the economy to slow, with the budget calling for GDP growth of 1.8% - 2% from 2024 to 2030.
The US Treasury Secretary Janet Yellen stated that the budget would “...push US debt above the size of the US economy, but would not contribute to inflationary pressures.”