If Mr. Biden’s plans were enacted, the government would spend what amounts to nearly a quarter of the nation’s total economic output every year over the course of the next decade. It would collect tax revenues equal to just under one fifth of the total economy.
May 26, 2021, 9:17 p.m. ET
In each year of Mr. Biden’s budget, the government would spend more as a share of the economy than all but two years since World War II: 2020 and 2021, which were marked by trillions of dollars in federal spending to help people and businesses endure the pandemic-induced recession. By 2028, when Mr. Biden could be finishing a second term in office, the government would be collecting more tax revenue as a share of the economy than almost any point in modern statistical history; the only other comparable period was the end of President Bill Clinton’s second term, when the economy was roaring and the budget was in surplus.
The documents also show the conservative approach Mr. Biden’s economic team is taking with regard to projecting the economy’s growth, as compared to his predecessor’s. Mr. Biden’s aides predict that even if his full agenda were enacted, the economy would grow at just under 2 percent per year for most of the decade, after accounting for inflation. That rate is similar to the historically sluggish pace of growth that the nation has averaged over the past 20 years. Unemployment would fall to 4.1 percent by next year — from 6.1 percent today — and remain below 4 percent in the years thereafter.
Former President Donald J. Trump consistently submitted budget proposals that predicted his policies would push the economy to a sustained annual rate of nearly 3 percent for a full decade. In his four years in office, annual growth only reached that rate once. The final budget submitted by President Barack Obama, when Mr. Biden was vice president, predicted annual growth of about 2.3 percent on average over the span of a decade.
The Biden forecasts continue to show his administration has little fear of rapid inflation breaking out across the economy, despite recent data showing a quick jump in prices as the economy reopens after a year of suppressed activity amid the pandemic. Under the Biden team’s projections, consumer prices never rise faster than 2.3 percent per year, and the Federal Reserve only gradually raises interest rates from their current rock-bottom levels in the coming years.
Mr. Biden has pitched the idea that now is the time, with interest rates low and the nation still rebuilding from recession, to make large up-front investments that will be paid for over a longer time horizon. His budget shows net real interest costs for the federal government remaining below historical averages for the course of the decade. Interest rates are controlled by the Federal Reserve, which is independent of the White House.
Even if interest rates stay low, payments on the national debt would consume an increased share of the federal budget. Net interest payments would double, as a share of the economy, from 2022 to 2031.
A spokesman for the White House budget office declined to comment on Thursday.
Administration officials are set to detail the full budget, which will span hundreds of pages, on Friday in Washington. On Thursday, Mr. Biden is scheduled to deliver an address on the economy in Cleveland.