The long-awaited President’s Budget Request for Fiscal Year 2022 was released Thursday. Did you miss it? So did we. The Biden Administration played an April Fool’s joke on all us budgeteers. After reports that the administration would roll out a snapshot of its FY22 budget priorities this week, they pulled Lucy Van Pelt and yanked the ball away. We were only expecting a so-called “Skinny Budget” not the full deal. Basically, an outline of “discretionary spending” levels that would be in the actual full budget request. When it presumably comes out in a month or so, the full request will include other proposals, detailed tables and backgrounds and the actual information to draft the legislation to fund government in FY22.
What we did get from the administration this week was a more than $2 trillion “American Jobs Plan.” While it’s relatively “skinny” on details, it’s chock full of big ideas and vast dollar amounts. The Administration is calling it “infrastructure.” But really it is that and the kitchen sink. Sure, there was funding in there for roads, bridges, and ports. Broadband, the electric grid, and drinking water systems, too. But there were also funds for homes, schools, and daycare facilities, not typically a federal responsibility. Research and development as well as manufacturing – not typically infrastructure. And there were funds – $400 billion – to increase the availability of home health care and facilities for the elderly and disabled. Like that or not, that does not fit historically as infrastructure.
The administration did include – to their credit – offsets for their “American Jobs Plan” in their “Made in America Tax Plan.” Most of this package (the last 3 of 25 pages) is focused on undoing or reforming some of the changes made to the corporate tax code by the 2017 tax bill. In addition to various provisions going after the offshoring of jobs or profit shifting out of the U.S. into tax havens, the plan also puts the corporate tax rate at 28 percent. Republicans immediately derided it as a tax increase from the current 21 percent. Okay, but you would only have to go back five years and it would have been a tax cut from the then-35 percent rate.
Truth be told, the math gets a little fuzzy because while they are redefining what constitutes infrastructure, they’re also moving the goalposts when it comes to legislative scoring. They are balancing 8 years of spending against 15 years of revenue to make it work – which isn’t normal budget math. But in a time when many lawmakers on both sides of the aisle think deficits don’t matter and want to spend in a way that would make drunken sailors blush, it is refreshing to see offsets. The real test will be to see what the administration fights for. They have maintained that both the spending and the revenue raisers in the package are good policy. We’ll see in the coming months what they will go to the mat to defend because they are going to have challenges even within their party.
We say coming months because this package – all $4 trillion in spending and revenue – is only 25 pages long. Roughly $160 billion a page. The real test will be when we see the 250 or 2,500 pages of legislative text and reports that detail how all these programs are going to work.
There is a real and pressing need to invest in our nation’s (traditional) infrastructure. The jarring disparities experienced in both the health effects of and economic recovery from the pandemic are leading many to question the adequacy of our social safety nets. The Biden Administration has placed its marker on how to begin to address these issues. But changes of this magnitude and scope must go through the relevant committees to be fully vetted by Congress and the public. Because if you think enduring, effective, equitable public policy simply springs forth from 25 page “plans,” you’re just fooling yourself.