Washington Insider-- Monday

Biden Administration's First Budget Request

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Manchin Won't Support Ending, Modifying Filibuster

Democratic hopes that they could convince Sen. Joe Manchin, D-W.Va., to back modifying or ending the filibuster have again had their hopes dashed as the key senator last week again said he will not back such changes.

"There is no circumstance in which I will vote to eliminate or weaken the filibuster," Manchin wrote in a Washington Post op-ed published Wednesday night. He described the stand as sticking up for small and rural states and said that only through compromise between Republicans and Democrats would the Washington paralysis end.

The means Democrats and the Biden White House will have to compromise to get the 60 votes they need on must-pass bills not tied to reconciliation.

Senate Approach To Counter China Is Taking Shape

A bipartisan bill was introduced directing the U.S. government to adopt a policy of “strategic competition” with China to “protect and promote our vital interests and values.” The 283-page bill crafted by the Senate Foreign Relations Committee is part of a push by Majority Leader Chuck Schumer, D-N.Y., to vote this spring on a broad, bipartisan package designed to confront China's economic and geopolitical power.

The measure seeks infrastructure investment and technology developments to compete with China on global supply chains, science and technology. Besides the legislation introduced yesterday, the centerpiece of Schumer's broader plan is the Endless Frontier Act, a bill to boost U.S. semiconductor development.

The Senate Commerce Committee will hold a hearing on that proposal on April 14. The Foreign Relations panel is scheduled to act on its bill the same day.

Washington Insider: Biden Administration's First Budget Request

President Joe Biden's budget proposal on Friday kicked off what's likely to be a long, drawn-out fight in Congress over how to fund the federal government, the Hill said this weekend. The request calls for annual discretionary spending of $1.52 trillion. That includes a 15.7% increase in domestic spending and a 1.7% boost in defense.

Although the plan contained no detail on taxes or mandatory spending programs, as well as the usual 10-year projection for spending and revenues, it nonetheless offers valuable insights into Biden's priorities, the Hill said.

The proposal “affirmed” the administration's embrace of government spending and follows recent big proposals with a “subsequent measures focused on highly visible issues like child care and college tuition.” The request, up $118 billion from current levels, is 25% higher than discretionary spending was at the end of the Obama administration.

The administration is making the argument that the pendulum has swung too far toward austerity over the years, resulting in a lack of resources that “exacerbated inequality, left the country's infrastructure in disrepair, created educational stagnation and allowed social ills to fester.”

White House press secretary Jen Psaki noted that “we are inheriting a legacy of chronic underinvestment, in our view, in priorities that are vital to our long-term success and our ability to confront the challenges before us, so the president is focused on reversing this trend and reinvesting in the foundations of our strength.”

The Hill said the proposal highlighted the fact that the defense budget is still a “sacred cow.” Budget watchers had expected Biden to keep defense spending flat – and progressives sought a 10% cut – but the proposal surprised both by calling for increases in Pentagon spending. It would add $12.3 billion to defense, a 1.7% increase, which in a typical year would just keep pace with inflation. At a total of $753 billion, it leaves in place significant increases to defense spending that former President Trump set in motion.

But even the unexpected increase was not enough for some. A joint statement by top Republicans, including those on defense and budget committees in the Senate, characterized the 1.7% increase as a virtual cut and accused Biden of ceding ground to China and Russia – and sending a terrible signal not only to our adversaries in Beijing and Moscow, but also to our allies and partners.”

In one important way, the administration's budget proposal matched the one Trump put out during his first months in office: it was more emaciated than skinny due to its limited details. Like Trump, Biden only released a very limited set of specifics and sidestepped questions about the long-term budget effects. The White House said a full proposal is due later this spring.

Only then will it become clear how the administration intends to pay for the new spending, whether there is a plan to lower the deficit and how it intends to deal with mandatory programs.

That spending, which includes programs like Social Security, Medicare, Medicaid and a slew of anti-poverty programs such as nutritional assistance, accounts for about two-thirds of annual government spending. They are far more significant drivers of spending and deficits than the discretionary side of the ledger this proposal covered.

“We can't truly evaluate the president's agenda until we know how he'll address the other two-thirds of the budget and what he will do on the other side of the ledger with taxes,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

“We hope the full budget plan will include policies to not only offset new spending, but secure the trust funds and improve the country's long-term fiscal path,” MacGuineas said.

But even the focus on spending without discussion of taxes, deficits or the country's fiscal outlook is a reminder that the issue of debt may have lost some of its political sway over both politicians and voters.

Whereas President Trump famously promised to put “America First” in his policy agenda, Biden's budget request of $63.5 billion for the State Department and international programs, a 12% increase over current levels, reflects his view that some of the biggest problems the country faces require global cooperation, The Hill said.

He plans to quadruple the funding for international climate programs and is requesting a four-year commitment of $4 billion to stabilize Central America, home to many of the migrants arriving at the southern border.

He also would boost the Centers for Disease Control and Prevention budget to $8.7 billion, from $7.9 billion, with a focus on international preparedness to help tackle future pandemics. The budget would fully fund U.S. commitments to United Nations peacekeeping, including payments missed under the Trump administration.

International programs at the Treasury Department would get a 73% boost, just as Secretary Janet Yellen is calling for a summer agreement on a global minimum tax to clamp down on tax avoidance by multinational corporations.

The Hill notes that while presidential budget requests shape the debate around annual spending, Congress usually has its own ideas--and that those matter most since lawmakers have the power of the purse.

So, we will see. The new administration's proposal suggests that it intends to work for significant changes, shifts that producers should watch closely as the new and modified policies are debated and implemented, Washington Insider believes.

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