US Biden Unveils $7.1 Trillion Budget Plan... Increases Defense Spending and Reduces Fiscal Deficit

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The Biden administration has increased next year's national security budget, citing North Korea's successive missile threats, Russia's invasion of Ukraine, and China's rise.

According to the Washington Post (WP) and the Wall Street Journal (WSJ), the Biden administration submitted a $5.8 trillion (approximately 7,100 trillion KRW) budget proposal for the 2023 fiscal year to Congress on the 28th (local time).

This budget proposal is characterized by an increase in the national security budget while aiming to reduce the fiscal deficit by about $1 trillion over the next 10 years to improve national fiscal soundness. It also includes measures to secure tax revenue from the ultra-wealthy.

Specifically, the Biden administration allocated $813 billion for the national security budget for the 2023 fiscal year starting October 1, which is about 4% higher than this year's $782 billion.

Among this, the Department of Defense's allocated budget is $773 billion, an 8.1% increase from the previous year. Defense Secretary Kathleen Hicks mentioned in a briefing that, citing Russia's invasion of Ukraine, deterrence strengthening against China, the greatest strategic competitor, and the ongoing threats from North Korea and Iran, "At a time facing countless challenges, such investment is more essential than ever."

Looking at the defense budget by detailed items, the proportion of the budget for nuclear weapons modernization and research and development, including hypersonic missile development, increased compared to previous years. Budgets are allocated for the development of the Columbia-class next-generation ballistic missile submarine, next-generation interceptor missiles urgently needed to defend against North Korea's ICBMs, and the purchase of new B-21 strategic bombers.

Additionally, the national security budget includes $1 billion for Ukraine in response to the Russian invasion, and $6.9 billion for related budgets such as the European defense initiative and support for the North Atlantic Treaty Organization (NATO).

Along with this, the Biden administration's budget proposal also includes increased spending on climate change and pandemic-related budgets such as clean energy. The Department of Health and Human Services has been allocated $8.2 billion for pandemic and other biological threat preparedness, and $21 billion for clean energy programs and climate resilience.

Furthermore, $17 billion to eradicate illegal gun trafficking and a total of $17.4 billion to enhance law enforcement capabilities of the Department of Justice are included.

This government budget proposal is smaller than the $6.01 trillion budget for the 2022 fiscal year, which was the first budget proposal released after President Biden took office last year. The budget for the "Build Back Better Act," a key project of President Joe Biden expected to require more than $2 trillion, was excluded due to uncertainties in congressional negotiations.

The proposal also includes measures to reduce the U.S. fiscal deficit. President Biden stated in a statement, "The budget includes historic deficit reduction, historic investments in domestic and international security, and an unprecedented commitment to building an economy where everyone has the opportunity to succeed." WP forecasted, "Last year's White House budget would have increased the national fiscal deficit by about $1.4 trillion over 10 years," but "applying this year's budget could reduce the annual deficit by more than $100 billion after 2029."

The White House announced that the spending budget includes $2.5 trillion in new tax revenue. To this end, a "billionaire minimum income tax" will be introduced, imposing a 20% minimum tax on all income, including unrealized capital gains, for Americans holding assets worth over $100 million.

The Biden administration expects the U.S. fiscal deficit to decrease by nearly 50% in the 2022 fiscal year to around $1.4 trillion. In this scenario, the deficit-to-GDP ratio will drop from 12.4% in the 2021 fiscal year to 5.8% in the 2022 fiscal year. The target is 4.8% by the 2032 fiscal year.

However, it remains uncertain whether this budget proposal will pass Congress as is.

This content was produced with the assistance of AI translation services.