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    Inflation Is New Battle Line as Republicans and Biden Spar Over Spending

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    Republicans say President Biden’s spending plans will keep inflation rising, but the White House says the proposals could help tame costs.WASHINGTON — Republicans have made Americans’ concerns over rising prices their primary line of attack on President Biden’s economic agenda, seeking to derail trillions of dollars in spending programs and tax cuts by warning that they will produce rocketing 1970s-style inflation.They have seized on the increasing costs of gasoline, used cars, and other goods and services to accuse the president of stoking “Bidenflation,” first with the $1.9 trillion stimulus bill he signed in March and now with a proposed $3.5 trillion economic bill that Democrats have begun to draft in the Senate.There are unusually large amounts of uncertainty over the path of inflation in the coming months, given the vagaries around restarting a pandemic-stricken economy. Yet even many economists who worry that high prices will linger longer than analysts initially expected say there is little reason to believe the problem will worsen if Mr. Biden succeeds in his attempts to bolster child care, education, paid leave, low-emission energy and more.“There’s been a lot of fear-mongering concerning inflation,” Joseph E. Stiglitz, a liberal economist at Columbia University, said on Tuesday during a conference call to support Mr. Biden’s economic plans. But the president’s spending proposals, he said, “are almost entirely paid for.”“If they are passed as proposed,” he added, “there is no conceivable way that they would have any significant effect on inflation.”The debate over the effects of the proposals “has nothing to do with the current angst over inflation,” said Mark Zandi, a Moody’s Analytics economist who has modeled Mr. Biden’s plans.Still, rising inflation fears have forced the president and his aides to shift their economic sales pitch to voters. The officials have stressed the potential for his efforts to lower the cost of health care, housing, college and raising children, even as they insist the current bout of inflation is a temporary artifact of the pandemic recession.The administration’s defense has at times jumbled rapid price increases with inflation-dampening efforts that could take years to bear fruit. And officials concede that the president recently overstated his case on a national stage by claiming incorrectly that Mr. Zandi had found his policies would “reduce inflation.”The economics of the inflation situation are muddled: The United States has little precedent for the crimped supply chains and padded consumer savings that have emerged from the recession and its aftermath, when large parts of the economy shut down or pulled back temporarily and the federal government sent $5 trillion to people, businesses and local governments to help weather the storm. The economy remains seven million jobs short of its prepandemic total, but employers are struggling to attract workers at the wages they are used to paying.But the political danger for Mr. Biden, and opportunity for Republicans who have sought to derail his plans, is clear.The price index that the Federal Reserve uses to track inflation was up nearly 4 percent in May from the previous year, its fastest increase since 2008. Republicans say it is self-evident that more spending would further inflame those increases — a new rationale for a longstanding conservative attack on the vast expansion of government programs that Mr. Biden is proposing.Nine out of 10 respondents to a new national poll for The New York Times by the online research firm Momentive, which was previously known as SurveyMonkey, say they have noticed prices going up recently. Seven in 10 worry those increases will persist “for an extended period.” Half of respondents say that if the increases linger, they will pull back on household spending to compensate.Administration officials acknowledge that inflation worries are softening consumer confidence, including in the University of Michigan’s survey of consumer sentiment, even as the economy rebounds from recession with its strongest annual growth rate in decades.The issue has given Mr. Biden’s opponents their clearest and most consistent message to attack an agenda that remains popular in public opinion polls.“There’s no question we have serious inflation right now,” Senator Patrick J. Toomey, Republican of Pennsylvania, told CNN’s “State of the Union” on Sunday. “There is a question about how long it lasts. And I’m just worried that the risk is high that this is going to be with us for a while. And the Fed has put itself in a position where it’s going to be behind the curve. You combine that with massively excess spending, and it is a recipe for serious problems.”Some Republicans say a portion of Mr. Biden’s spending plans would not drive up prices — particularly the bipartisan agreement he and senators are negotiating to invest nearly $600 billion in roads, water pipes, broadband and other physical infrastructure. But the party is unified in criticizing the rest of the president’s proposals in a way that many economists say ignores how they would actually affect the economy.“There’s no question we have serious inflation right now,” Senator Patrick Toomey, Republican of Pennsylvania, said.Stefani Reynolds for The New York TimesSome of the proposals would distribute money directly and quickly to American consumers and workers — by raising wages for home health care workers, for example, and continuing an expanded tax credit that effectively functions as a monthly stipend to all but the highest-earning parents. But they would also raise taxes on high earners, and much of the spending would create programs that would take time to find their way into the economy, like paid leave, universal prekindergarten and free community college.Some conservative economists worry that the relatively small slice of immediate payments would risk further heating an already hot economy, driving up prices. The direct payments in the proposals “would exacerbate pre-existing inflationary pressures, put additional pressure on the Fed to withdrawal monetary policy support earlier than it had planned, and put at risk the longevity of the recovery,” said Michael R. Strain, an economist at the conservative American Enterprise Institute.Other economists in and outside the administration say those effects would be swamped by the potential of the spending programs like paid leave to reduce inflationary pressure.“The economics of these investments strongly belies the Republican critique because these are investments that will yield faster productivity growth, greater labor supply, the expansion of the economy’s supply side — which very clearly dampens inflationary pressures, not exacerbates them,” Jared Bernstein, a member of Mr. Biden’s Council of Economic Advisers, said in an interview.Administration officials pivoted their sales pitch on the president’s agenda last week to emphasize the potential for his plans to reduce prices.Mr. Biden’s agenda is “about lowering costs for families across the board,” Mike Donilon, a senior adviser at the White House, told reporters. He said officials believed they were in “a strong position” against Republican attacks on inflation, in part by citing Mr. Zandi’s recent analysis. The president also referred to that analysis last week during a forum in Ohio on CNN, saying it had found that his proposals would “reduce inflation.”The Moody’s analysis did not say that; instead, it found that some of Mr. Biden’s spending plans could help relieve price pressures several years from now. It specifically cited proposals to build additional affordable housing units nationwide, which could help hold down rents and housing prices and reduce the cost of prescription drugs.White House officials concede that Mr. Biden overstated the analysis but point to more measured remarks in a speech this month, when he said his plans would “enhance our productivity — raising wages without raising prices.” More

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    Senators and Biden Aides Struggle to Save Bipartisan Infrastructure Deal

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    A looming deadline and a last-minute need for a new revenue source are complicating a deal that was announced nearly a month ago.WASHINGTON — Congressional negotiators and the Biden administration tried on Monday to salvage a nearly $600 billion bipartisan agreement to invest in roads, water pipes and other physical infrastructure, after Republicans rejected a key component to pay for the plan and resisted Democratic plans for an initial procedural vote on Wednesday.Senators and administration officials are still working to hammer out the details of the deal, including how to ensure that a plan to finance it will secure 60 votes for Senate passage. White House officials expressed confidence on Monday that the agreement could be finalized. But its fate was uncertain.Mr. Biden is pushing his economic agenda in parts. The bipartisan agreement is meant to be Step 1 — with a much larger, Democratic bill to follow. But weeks after their announcement of a deal, the bipartisan group has not released legislative text or received external confirmation that it is fully financed. A top negotiator said over the weekend that the group jettisoned a key plan included in the deal that would have raised revenue by giving the I.R.S. more power to catch tax cheats.Republicans have come under pressure to oppose that funding method from conservative anti-tax groups, who say it would empower auditors to harass business owners and political targets. Democrats say the increased enforcement would target large corporations and people who earn more than $400,000 — and note that improved tax enforcement has been a bipartisan goal of administrations dating back decades.Still, on Monday evening Senator Chuck Schumer of New York, the majority leader, set up a procedural vote to begin moving toward debate on the bipartisan deal, even without the text of the plan, on Wednesday. Mr. Schumer said that if senators agreed to consider infrastructure legislation, he would move to bring up either the bipartisan deal, should one materialize this week, or a series of individual infrastructure bills that have been approved on a bipartisan basis by Senate committees.The plan was an effort to force negotiators to move toward finalizing details and a critical mass of Republicans to commit to advancing the deal, with Democrats eager to advance the legislation before the Senate leaves for its August recess. Mr. Schumer said he had support from the five main Democratic negotiators involved in talks.“It is not a deadline to determine every final detail of the bill,” he said. A vote of support on Wednesday, he added, would signal that “the Senate is ready to begin debating and amending a bipartisan infrastructure bill.”On Monday, Mr. Biden pushed for passage of the agreement during remarks at the White House, where he promoted his administration’s economic progress. But administration officials made clear later in the day that their patience for the finalization of the bipartisan agreement was running thin.“We believe it’s time to move forward with this vote — with congressional action,” Jen Psaki, the White House press secretary, said at a news briefing. Asked what the administration’s backup plan was if the plan failed to clear the test vote, Ms. Psaki demurred.“We’re not quite there yet,” she said. “There is a lot of good work that’s happened. Two days is a lifetime in Washington, so I don’t think we’re going to make predictions of the death of the infrastructure package.”Republican leaders said they wanted to see legislative text before voting on a deal.“We need to see the bill before voting to go to it. I think that’s pretty easily understood,” Senator Mitch McConnell of Kentucky, the Republican leader, told reporters on Monday. “I think we need to see the bill before we decide whether or not to vote for it.”Democrats have argued that negotiators have had nearly a month to iron out the details and that the Senate has previously taken procedural votes without finalized bill text — including when Mr. McConnell led his caucus in a failed attempt to repeal and replace the Affordable Care Act in 2017.The biggest sticking point remains how to pay for the plan. The I.R.S. plan was estimated to bring in more than $100 billion in new tax revenue over a decade.It is unclear what the group will turn to as a substitute. White House officials and the 10 core Senate negotiators — five Democrats and five Republicans — were working on Monday to find a new revenue source.Senator Rob Portman, Republican of Ohio and a key negotiator, floated the prospect on Sunday of undoing a Trump-era rule that changes the way drug companies can offer discounts to health plans for Medicare patients as an option. The Congressional Budget Office estimated in 2019 that it would cost $177 billion over 10 years, and the rule has not yet been implemented.Ms. Psaki told reporters that the administration is “open to alternatives, very open to alternatives from this end.”“But we’ll let those conversations happen privately and be supportive of them from our end,” she said.Senators were expected to virtually meet Monday evening as they continued to haggle over the details. The group met for more than two hours Sunday evening.“I think we need to see the bill before we decide whether or not to vote for it,” Senator Mitch McConnell, the Republican leader, told reporters on Monday.Stefani Reynolds for The New York TimesMr. Biden continued to push on Monday for legislative action, casting his economic policies, along with vaccination efforts, as a critical driver of accelerating growth. He promised that his remaining agenda items would help Americans work more and earn more money while restraining price increases, pushing back on a critique from Republicans.Administration officials and Mr. Biden say the Democrats’ $3.5 trillion plan — the larger bill that would follow the bipartisan infrastructure bill — will dampen price pressures by increasing productivity. The president said the proposals would free up Americans to work more through subsidized child care, national paid leave and other measures, as well as improve the efficiency of the economy.The spending “won’t increase inflation,” Mr. Biden said. “It will take the pressure off inflation.”He also said he had faith in the independent Federal Reserve and its chair, Jerome H. Powell, to manage the situation. The Fed is responsible for maintaining both price stability and maximum employment.“As I made clear to Chairman Powell of the Federal Reserve when we met recently, the Fed is independent. It should take whatever steps it deems necessary to support a strong, durable economic recovery,” Mr. Biden said. “But whatever different views some might have on current price increases, we should be united on one thing: passage of the bipartisan infrastructure framework, which we shook hands on — we shook hands on.”Mr. Biden used more of the speech to push for the $3.5 trillion plan, which Democrats aim to pursue without Republican support through a process known as budget reconciliation, which bypasses a Senate filibuster.In describing the varied social and environmental initiatives he hopes to include in the plan, the president repeatedly stressed the need for government action as a means to raising living standards and creating jobs.That plan contains the bulk of Mr. Biden’s $4 trillion economic agenda that is not included in the bipartisan bill, like expanding educational access, building more affordable and energy-efficient housing, incentivizing low-carbon energy through tax credits and a wide range of other social programs meant to invest in workers.Republicans have also amplified concerns about inflation since Democrats pushed through a $1.9 trillion pandemic relief bill in March. In a letter to his conference this week, Representative Kevin McCarthy of California, the Republican leader, said that “prices on everything from gas to groceries are skyrocketing,” and he vowed that “we will continue to hold Democrats to account for their reckless handling of the economy.”Mr. Biden’s economic team has said repeatedly that inflation increases are largely a product of the pandemic and will fade in the months or years to come.Mr. Biden dismissed a question from a reporter after the speech about the potential for unchecked inflation, which he said no serious economist foresaw.Margot Sanger-Katz More

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    Democrats Roll Out $3.5 Trillion Budget to Fulfill Biden’s Broad Agenda

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    “We’re going to get a lot done,” President Biden said, as Senate Democrats began drafting the details on a social and environmental bill that could yield transformative change.WASHINGTON — President Biden and congressional Democrats vowed on Wednesday to push through a $3.5 trillion budget blueprint to vastly expand social and environmental programs by extending the reach of education and health care, taxing the rich and tackling the warming of the planet.The legislation is still far from reality, but the details that top Democrats have coalesced around are far-reaching. Prekindergarten would be universal for all 3- and 4-year-olds, two years of community college would be free, utilities would be required to produce a set amount of clean energy, and prescription drug prices would be lowered. Medicare benefits would be expanded, and green cards would be extended to some undocumented immigrants.At a closed-door luncheon in the Capitol, Mr. Biden rallied Democrats and the independents aligned with them to embrace the plan, which would require every single one of their votes to move forward over united Republican opposition. But crucial moderate lawmakers had yet to say whether they would accept the proposal, with a majority of policy details left to resolve.Mr. Biden’s message to the senators on Wednesday, said Senator Richard Blumenthal of Connecticut, was “be unified, strong, big and courageous.”Senate Democratic leaders have said they aim to pass both the budget blueprint and a narrower, bipartisan infrastructure plan that is still being written before the chamber leaves for the August recess — a complex and politically tricky task in a 50-50 Senate. The narrowly divided House would also have to pass the budget blueprint before both chambers begin tackling the detailed legislation.Speaker Nancy Pelosi, who must ultimately get the package through the House, embraced the deal, telling Democrats in a letter on Wednesday, “This budget agreement is a victory for the American people, making historic, once-in-a-generation progress for families across the nation.”The outline includes large swaths of Mr. Biden’s $4 trillion economic agenda. It wraps in every major category from his American Families Plan, including investments in child care, paid leave and education, and expanded tax credits that this week will begin providing a monthly check to most families with children.“I think we’re going to get a lot done,” Mr. Biden told reporters as he left his first in-person lunch with the Democratic caucus as president.Nodding to budget constraints, party leaders conceded that many of the programs included in their plan — including the tax credits — could be temporary, leaving a future Congress to decide whether to extend them further.The proposal also includes some measures that go beyond what Mr. Biden has called for, like expanding Medicare to cover dental, vision and hearing benefits. Democratic leaders left it to the Senate Finance Committee to decide whether to include reducing the eligibility age for Medicare to 60, a priority of Senator Bernie Sanders of Vermont, the Budget Committee chairman.The resolution would also create what would effectively be a tax on imports from countries with high levels of greenhouse gas emissions. That could violate Mr. Biden’s pledge not to raise taxes on Americans earning less than $400,000 a year if the tax is imposed on products that typical consumers buy, such as electronics from China.Democrats on Mr. Sanders’s committee must produce a budget resolution in the coming days that includes so-called reconciliation instructions to other Senate committees, which in turn will draft legislation detailing how the $3.5 trillion would be spent — and how taxes would be raised to pay for it.That would pave the way for Democrats to produce a reconciliation bill this fall that would be shielded from a filibuster, allowing them to circumvent Republican opposition but requiring all 50 of their members — and a majority in the narrowly divided House — to pass it.“In some cases, it doesn’t provide all the funding that I would like to do right now,” Mr. Sanders said. “But given the fact that we have 50 members, and that compromises have got to be made, I think this is a very, very significant step forward.”He added: “If you’re asking me at the end of the day, do I think we’re going to pass this? I do.”A neighborhood in Austin, Texas, where many homes have solar panels. The blueprint of the legislation includes clean energy provisions and other social programs.Tamir Kalifa for The New York TimesAt the private lunch, Senator Chuck Schumer of New York, the majority leader, outlined the proposal and the directives it would lay out.Democrats included the creation of a civilian climate corps to add jobs to address climate change and conservation, and to provide for child care, home care and housing investments. They are also expected to try to include a path to citizenship for some undocumented immigrants and address labor protections.Democrats would also extend expanded subsidies for Americans buying health insurance through the Affordable Care Act that were included in the broad pandemic aid law that Mr. Biden signed this year.Huge investments would go to renewable energy and a transformed electrical system to move the U.S. economy away from oil, natural gas and coal to wind, solar and other renewable sources. The budget blueprint is to include a clean energy standard, which would mandate the production of electricity driven by renewable sources and bolster tax incentives for the purchase of electric cars and trucks.To fully finance the bill, it is expected to include higher taxes on overseas corporate activities to alleviate incentives for sending profits overseas, higher capital gains rates for the wealthy, higher taxes on large inheritances and stronger tax law enforcement.Senator Ron Wyden of Oregon, the chairman of the Finance Committee, said on Wednesday that he was also preparing to overhaul a deduction for companies not organized as corporations, like many small businesses and law firms — created by the 2017 Republican tax law — in order to cut taxes from small businesses but raise additional revenues from wealthy business owners.Specific provisions will have to pass muster with the strict budgetary rules that govern the reconciliation process, which require that provisions affect spending and taxation, not just lay out new policies. The Senate parliamentarian could force Democrats to overhaul or outright jettison the clean energy standard, the provision that climate activists and many scientists most desire, as well as the immigration and labor provisions, among others.Moderate Democrats, who had balked at a progressive push to spend as much as $6 trillion on Mr. Biden’s entire economic agenda, largely declined to weigh in on the blueprint until they saw detailed legislation, saying they needed to evaluate more than an overall spending number.“We’ve got to get more meat on the bones for me,” Senator Jon Tester, Democrat of Montana, told reporters, though he added that he would ultimately vote for the budget blueprint. “I’ve got to get more information on what’s in it.”The size of the package could be shaped by the success or failure of the bipartisan infrastructure plan, which would devote nearly $600 billion in new spending to roads, bridges, tunnels, transit and broadband. The group of lawmakers negotiating that package has yet to release legislative text as they haggle over the details of how to structure and pay for the plan.“I want to be able to tell people in South Carolina: I’m for this, I’m not for that,” said Senator Lindsey Graham of South Carolina, the top Republican on the Senate Budget Committee.Stefani Reynolds for The New York TimesIf Republicans cannot deliver enough votes to move the package past a filibuster, Democrats could simply fold physical infrastructure spending into their reconciliation plan and take away any chance for Republicans to shape it, said Senator Rob Portman, Republican of Ohio and one of the negotiators of the bipartisan bill.“If we don’t pass infrastructure, they’re going to put even more infrastructure in than we have and worse policies,” said Mr. Portman, who fielded skepticism from his colleagues at a private Republican lunch on Tuesday. Some Republicans had hoped that a bipartisan accord on physical infrastructure projects would siphon momentum from a multitrillion-dollar reconciliation package. Instead, it appears very much on track, and it may intensify the pressure on Republicans to come to terms on a bipartisan package, even if they fiercely oppose the rest of the Democrats’ agenda.“I want to be able to tell people in South Carolina: I’m for this, I’m not for that,” said Senator Lindsey Graham of South Carolina, the top Republican on the Budget Committee and a peripheral presence in the bipartisan talks.He added that the lengthy floor debate over the blueprint would allow Republicans to “ferociously attack it, to have amendments that draw the distinctions between the parties, to scream to high heaven that this is not infrastructure.”Senator Joe Manchin III of West Virginia, a moderate Democrat, said he looked “forward to reviewing this agreement” but was also interested in how the programs would be financed.Sarahbeth Maney/The New York TimesSenator Joe Manchin III of West Virginia, the centrist Democrat whose support might be determinative, told reporters after lunch with the president that he had concerns about some of the climate language. But he did not rule out supporting the budget proposal or the subsequent package. Senator Kyrsten Sinema, Democrat of Arizona and another key moderate, also hung back on Wednesday.Still, the $3.5 trillion package had plenty in it to appeal to senior Democrats who were eager to use it to advance their longtime priorities. For Senator Patty Murray of Washington, the chairwoman of the Health, Education, Labor and Pensions Committee, it was an extension of a more generous child tax credit, as well as subsidies for child care, prekindergarten and paid family leave.For Mr. Sanders, it was the Medicare and climate provisions.“Finally, we are going to have America in the position of leading the world in combating climate change,” he said.Mr. Tester said the need for school construction was so high that trillions could go to that alone.“The plan is a strong first step,” said Senator Elizabeth Warren, Democrat of Massachusetts, adding that she was focused on funding universal child care. “We’re slicing up the money now to find the right ways to make that happen.”The budget measure is expected to include language prohibiting tax increases on small businesses, farms and people making less than $400,000, fulfilling a promise Mr. Biden has maintained throughout the negotiations. Asked on Wednesday whether the proposed carbon tariff would violate that pledge, Mr. Wyden replied, “We’ve not heard that argument.”Lisa Friedman More

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    Democrats Propose $3.5 Trillion Budget to Advance with Infrastructure Deal

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    The measure, which would include money to address climate change, expand Medicare and fulfill other Democratic priorities, is intended to deliver on President Biden’s economic proposal.WASHINGTON — Top Democrats announced on Tuesday evening that they had reached agreement on an expansive $3.5 trillion budget blueprint, including plans to pour money into addressing climate change and expanding Medicare among an array of other Democratic priorities, that they plan to advance alongside a bipartisan infrastructure deal.Combined with nearly $600 billion in new spending on physical infrastructure contained in the bipartisan plan, which omits many of Democrats’ highest ambitions, the measure is intended to deliver on President Biden’s $4 trillion economic proposal. The budget blueprint, expected to be dominated by spending, tax increases and programs that Republicans oppose, would pave the way for a Democrats-only bill that leaders plan to push through Congress using a process known as reconciliation, which shields it from a filibuster.To push the package — and the reconciliation bill that follows — through the evenly divided Senate, Democrats will have to hold together every member of their party and the independents aligned with them over what promises to be unified Republican opposition. It was not clear if all 50 lawmakers in the Democratic caucus, which includes centrists unafraid to break with their party like Senator Joe Manchin III of West Virginia and Senator Kyrsten Sinema of Arizona, had signed off the blueprint. The package is considerably smaller than the $6 trillion some progressives had proposed but larger than some moderates had envisioned.Mr. Biden was set to attend lunch on Wednesday with Democrats, his first in-person lunch with the caucus since taking office, to rally the party around the plan and kick off the effort to turn it into a transformative liberal package. The blueprint, and subsequent bill, will also have to clear the House, where Democrats hold a razor-thin margin.The agreement, reached among Senator Chuck Schumer of New York, the majority leader, and the 11 senators who caucus with the Democrats on the Budget Committee, came after a second consecutive day of meetings that stretched late into the evening. Louisa Terrell, Mr. Biden’s head of legislative affairs, and Brian Deese, his National Economic Council director, were also present for the meeting.“We are very proud of this plan,” Mr. Schumer said, emerging from the session flanked by the other Democrats in the corridor outside his office just off the Senate floor. “We know we have a long road to go. We’re going to get this done for the sake of making average Americans’ lives a whole lot better.”Senator Bernie Sanders of Vermont, the liberal chairman of the Budget Committee, and Senator Mark Warner of Virginia, a key moderate who is negotiating the details of the bipartisan framework, also confirmed their support for the agreement, in impassioned remarks.“This is, in our view, a pivotal moment in American history,” proclaimed Mr. Sanders, who had initially called for a package as large as $6 trillion.Details about the outline were sparse on Tuesday evening, as many of the specifics of the legislative package will be hammered out after the blueprint is adopted. Mr. Warner said the plan would be fully paid for, though Democrats did not offer specifics about how they planned to do so. Discussions of how to raise that money are expected to continue in the coming days, one aide said.“I make no illusions how challenging this is going to be,” said Mr. Warner, who made a point of thanking both the committee and the bipartisan group he had been negotiating with. “I can’t think of a more meaningful effort that we’re taking on than what we’re doing right now.”The resolution is expected to include language prohibiting tax increases on small businesses and people making less than $400,000, according to a Democratic aide familiar with the accord, who disclosed details on the condition of anonymity.Mr. Schumer said the resolution would call for an expansion of Medicare to provide money for dental, vision and hearing benefits, a priority for liberals like Mr. Sanders. It is also likely to extend a temporary provision in the president’s pandemic relief law that greatly expands subsidies for Americans purchasing health insurance through the Affordable Care Act, one of the largest health measures since the law was passed more than a decade ago.“Every major program” requested by Mr. Biden would be “funded in a robust way,” Mr. Schumer said.Democrats will now have to hammer out the terms of the budget resolution and the bipartisan infrastructure deal, which Mr. Schumer has said he hopes to pass in the Senate before the chamber leaves for the August recess. Once the resolution is passed, the caucus will then draft the legislative package, which will fund and detail their ambitious proposals — and most likely impose hefty tax increases on the rich and on corporations to pay for them.Even before the agreement was reached, committees had quietly been working on a series of proposals for the bill and discussing how to keep the bill within the confines of the strict rules that govern the reconciliation process.The Senate Finance Committee had been drafting tax provisions to help pay for the spending. They include a restructuring the international business tax code to tax overseas profits more heavily in an effort to discourage U.S. corporations from moving profits abroad. They would also collapse dozens of tax benefits aimed at energy companies — especially oil and gas firms — into three categories focused on renewable energy sources and energy efficiency.Finance Committee Democrats will now turn their attention to the individual side of the tax code, where they want to raise taxes on large inheritances and raise capital gains tax rates on the richest Americans.On the spending side, Mr. Biden, working with Mr. Sanders, wants to make prekindergarten access universal and two years of community college free to all Americans. Money is expected to be devoted to a series of climate provisions, after liberal Democrats warned that they would not support the bipartisan framework without the promise of further climate action.Democrats also want to extend tax credits that were in the pandemic recovery plan for many years to come, including a $300-per-child credit for poor and middle-income families that began this week.The bipartisan infrastructure framework is expected to total $1.2 trillion, though about half that amount is simply the expected continuation of existing federal programs. Still, the nearly $600 billion in new spending, combined with funds already approved in Mr. Biden’s pandemic relief law and the pending infrastructure plan, could be transformative, steering government largess toward poor and middle-class families in amounts not seen since the New Deal.Jonathan Weisman More

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    U.S. Deficit Expected to Hit $3 Trillion in 2021, Budget Office Says

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    WASHINGTON — The U.S. economy is rebounding from the pandemic downturn faster than expected and is on track to regain all the jobs lost during the coronavirus by the middle of next year, partly as a result of enormous amounts of federal spending that will push the budget deficit to $3 trillion for the 2021 fiscal year, the Congressional Budget Office said on Thursday.New forecasts that incorporate the $1.9 trillion stimulus package that President Biden signed into law in March give little credence to warnings by Republican lawmakers and some economists that runaway inflation from all that spending could cripple the economy. Instead, the budget office predicted that a recent spike in prices for cars, airline tickets and other products would be temporary and begin to recede this year.Administration officials downplayed the deficit projections and focused instead on the predictions for economic growth, saying the strong numbers validate Mr. Biden’s push to douse the economy in stimulus and reinforce their view that inflation poses little threat to the recovery.The budget office, which is nonpartisan, predicted the economy would grow 6.7 percent for the year, after adjusting for inflation. That would be the fastest annual growth in the United States since 1984. It is significantly faster than the budget office and the Biden administration had each projected this year.The unemployment rate is also estimated to fall below 4 percent next year and remain historically low for years to come, signaling a significant acceleration in job gains from what the office predicted in February. The C.B.O. said then that unemployment would not fall below 4 percent until 2026.Budget office officials said the uptick in growth and employment forecasts stemmed in large part from aggressive government stimulus. But the economy is also benefiting from consumers, who are rapidly spending savings they built up during the pandemic. Households were buttressed by multiple rounds of stimulus, including direct checks, passed under President Donald J. Trump, and by a faster-than-anticipated return to normalcy in the economy as vaccinations have spread.Mr. Biden’s aides claimed credit for many of those developments. They said the president’s push to accelerate vaccine production and distribution had fueled the reopening of the economy. David Kamin, a deputy director of the White House National Economic Council, said in an interview that Mr. Biden’s stimulus package, the American Rescue Plan, was intended to drive a more rapid return to low unemployment, and that the budget office’s projections were evidence it was succeeding.“This report really goes to the very theory of the case as to why we pursued a rescue plan,” he said.Administration officials also heralded updated projections from the International Monetary Fund, released Thursday afternoon, which predicted the U.S. economy would grow 7 percent in 2021 after adjusting for inflation. In April, the I.M.F. forecast 4.6 percent growth for the year in the United States.Mr. Biden’s stimulus plan will push the federal budget deficit near record highs for the fiscal year, the budget office projected, but it will eventually leave the country in slightly better fiscal shape.The spending approved by Mr. Biden is projected to increase the deficit by $1.1 trillion for the fiscal year, which ends in September. The total deficit of $3 trillion would be the second-largest since 1945, in nominal terms and as a share of the economy, behind the 2020 fiscal year.But the increased growth that is accompanying the larger deficit this year will slightly improve the country’s fiscal outlook over the next decade, with the total deficit falling by about 1 percent, the budget office said.“Projected revenues over the next decade are now higher because of the stronger economy and consequent higher taxable incomes,” it wrote in its report.Mr. Biden’s rescue plan included direct payments of $1,400 each to low- and middle-income Americans, $350 billion to help states and municipalities patch what were expected to be budget shortfalls and hundreds of billions of dollars to accelerate vaccines and more widespread coronavirus testing. It also extended supplemental federal payments of $300 a week to unemployed workers through September, a benefit that Republican governors across the country have ended early as business owners complain of difficulties finding workers.The budget office cited those benefits as “dampening the supply of labor,” along with workers’ health concerns. It said the expiration of the benefits, along with less worry about contracting the virus, would help bolster employment growth in the second half of this year.Inflation, which has been a big topic in Washington, is projected to moderate in the months to come. The office forecast inflation rising above recent trends to hit 2.6 percent for the year, which is stronger growth than the February projection, yet officials see those price pressures subsiding in the second half of the year, as a variety of supply constraints ease in areas like lumber and automobiles.The forecasters expect economic growth to continue at a strong pace in 2022, hitting 5 percent in real terms. But they see it declining quickly in the years to follow, as the labor force grows more slowly than is typical. Budget office officials said that reflected, in part, the effects of more restrictive immigration policies adopted under Mr. Trump. By 2023, the office predicts, growth will slow to 1.1 percent.That forecast does not account for any additional economic policies Mr. Biden might enact in the intervening time. He is currently pushing Congress to approve as much as $4 trillion in spending and tax cuts meant to create jobs and aid growth by improving the productivity of workers and the broader economy, like repairing bridges and subsidizing child care costs to help more parents, particularly women, work additional hours.Fiscal hawks said the report’s long-term deficit projections underscored the need for any additional economic investments to be fully paid for, and not financed with federal borrowing. Debt held by the public rises to nearly $36 trillion by 2031, the budget office now predicts. That would be slightly larger — by just over 6 percent — than the size of the total American economy that year.“While it made sense to borrow to weather the pandemic and jumpstart the recovery,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget in Washington, “the strong economic growth projections from C.B.O. show that it is time to pivot away from further deficit-financing and towards paying for things and, ultimately, decreasing the national debt from its current path.” More

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    Biden’s Economic Agenda Faces Familiar Hurdle With Fight Over Financing

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    As Democrats pursue both bipartisan infrastructure negotiations and a catch-all economic package, old divisions persist on how to fund the spending.WASHINGTON — President Biden’s ambitions for a large-scale investment in the nation’s aging public works system along with other parts of his economic agenda hinge on what has always been the most difficult problem for lawmakers: agreeing on how to pay for the spending.That question has sent a group of centrist senators scrounging to find creative ways to cover nearly $600 billion in new spending that they want to include as part of a potential compromise plan to invest in roads, broadband internet, electric utilities and other federal infrastructure projects.The White House and Republicans have ruled out entire categories of potential ways to raise revenues. The impasse has become the subject of increasingly urgent talks between a large group of Senate Democrats, Republicans, White House officials and, at times, the president himself.Among the ideas that senators have discussed in recent days are repurposing unspent coronavirus relief funds, increasing enforcement by the I.R.S. and establishing user fees for drivers, including indexing the gas tax to inflation.Mr. Biden dispatched aides to Capitol Hill on Tuesday for discussions that his press secretary, Jen Psaki, said yielded progress but no agreement. Top White House officials are set to meet on Wednesday evening with Senator Chuck Schumer of New York, the majority leader, and Speaker Nancy Pelosi of California. Those discussions will center on infrastructure negotiations as well as a separate effort to move a large chunk of the president’s $4 trillion economic agenda through the Senate without any Republican votes using a procedural mechanism known as reconciliation.Among those expected to attend the meeting are Brian Deese, the director of the National Economic Council; Steve Ricchetti, a top adviser to Mr. Biden; Louisa Terrell, the director of the White House Office of Legislative Affairs; Shalanda Young, the acting director of the Office of Management and Budget, and Susan E. Rice, who leads the White House Domestic Policy Council, according to an official familiar with the plans.Democratic leaders in Congress are preparing to move a sweeping, multitrillion-dollar bill through the reconciliation process to avoid the need for Republican votes and approve spending on physical infrastructure, education, emissions reduction, child care, paid leave, antipoverty efforts and more. But centrist Democrats in the Senate — along with Mr. Biden — have said repeatedly that they want to strike a deal with Republicans on what would be a pared-down version of the president’s plan to rebuild roads, bridges and other infrastructure projects.The bipartisan group has not reached public agreement on how to finance the spending. Moderates in both parties insist that any deal be paid for with new revenues. Mr. Biden has offered $4 trillion in potential revenue sources, all concentrated on increasing the tax burden on businesses and high earners. Republicans have countered with hundreds of billions of their own, including increased taxes for drivers and repurposing previously borrowed money from the $1.9 trillion Covid relief bill that Mr. Biden signed into law this year.The senators who spearheaded the original framework spent much of Tuesday huddling with Mr. Deese, Mr. Ricchetti and Ms. Terrell to iron out the details of an outline to provide for $1.2 trillion over eight years, of which $579 billion is new funding, and how to finance it.“These things are always complicated and tough,” said Senator Rob Portman, Republican of Ohio, as he left the Capitol on Tuesday. “We’re getting there. We’re moving in the right direction.”Both sides did not appear to have enough common ground to formally announce how they would fund the plan. Shuttling across the Capitol for hourslong meetings scheduled around votes, the five Democrats and five Republicans declined to offer specifics beyond their prevailing optimism and plans to continue discussions.“Pay-fors,” Senator Bill Cassidy of Louisiana, one of the Republicans negotiating the agreement, said when asked what the remaining stumbling blocks were. “Anytime you’re coming up with $579 billion, you’ve got to figure out how to do it.”Mr. Biden has pledged to not raise taxes on the middle class, including at the gasoline pump. Senate Republicans refuse to increase tax rates for businesses and high earners. Both sides have dug in, to the surprise of some business leaders and other lobbyists in Washington.White House officials have shifted in recent weeks to pressing Republicans to support one of Mr. Biden’s proposals that would not amount to an increase in tax rates: a plan to spend tens of billions of dollars on increased enforcement by the I.R.S. The administration says such a plan would collect hundreds of billions of dollars from high earners and corporations that owe, but do not pay, their fair share of taxes. Republicans say they are concerned about the scope of the provision, but they have continued to discuss it in private meetings.“I would say we’ve put a lot of different options on pay-fors on the table,” Ms. Psaki told reporters on Tuesday. “And our view is: There’s a fundamental question right now. Are Republicans, members of Congress, do they believe that rich people should have to pay the taxes they owe, or should we increase the cost of travelers who are just trying to make it to work? That’s the basic question here. So we’ll see if they can make progress on that exact point.”Senator Kyrsten Sinema, Democrat of Arizona, is among the group of centrists that reached a tentative agreement on a framework for an infrastructure plan this month.Erin Schaff/The New York TimesLawmakers expressed optimism that a deal could be reached this week, but they acknowledged the division over raising revenues. “It’s always the hard part of an infrastructure package,” said Senator Shelley Moore Capito, Republican of West Virginia, who unsuccessfully tried to negotiate an even narrower package with Mr. Biden.“There’s a pretty good dividing line sometimes between Republicans and Democrats — certainly is on taxes,” she added. “But the president’s taken any kind of user fee off the table — which is traditionally where you pay for these things — so that just makes it extra hard.”Neil Bradley, the executive vice president and chief policy officer at the U.S. Chamber of Commerce, said on Tuesday that he expected any final deal to include some money from Mr. Biden’s plans to increase I.R.S. enforcement.He said he expected a final deal to have some pay-for surprises. “I suspect they’re going to have some creative ones that we don’t know about yet,” Mr. Bradley said.The debate over how to finance Mr. Biden’s economic agenda will also extend to any package that lawmakers seek to push through using reconciliation, which could be as much as $6 trillion. Senator Bernie Sanders, the Vermont independent who chairs the Senate Budget Committee, has asked Democrats on the panel to outline their priorities for the package as he aims to pass a budget blueprint to start the process by July.“I think the priorities that the president has established, that we have established, are solid,” Mr. Sanders said in an interview as he described his strategy. “But, you know, we’re going to have to make sure that we end up with numbers that 50 members can agree on.”He added that his intention was to pay for new initiatives — like child care subsidies and health care expansion — through “progressive taxation,” including raising taxes on the wealthy and corporations. But he did not extend that to one-off spending like road or bridge repairs or improving water systems, saying, “it is not necessary to pay for, in my view, one-time capital improvements in the infrastructure.”In an early indication of what Mr. Sanders called an effort to “soothe the edges,” he said he was open to relaxing a $10,000 cap on how much taxpayers can deduct in state and local taxes.Several Democrats, particularly lawmakers representing New York and California, have warned that they might not support any changes to the tax code that do not address that provision. A draft budget document circulated by staff on Capitol Hill and obtained by The New York Times appeared to include funds for a partial repeal of the state and local tax deduction, which could mean eliminating the cap for all but the highest earners, or raising the level of the cap. There were few details about how those funds would be distributed, and lawmakers and aides cautioned that the plan was in flux.“I have a problem with extremely wealthy people being able to get the complete deduction,” Mr. Sanders said. “I think that’s an issue we’ll have to work on.”Cecilia Kang More

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    Biden’s Budget Has Racial Equity Efforts Baked In

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    The budget, which was released on Friday, includes tens of billions of dollars worth of programs intended to bolster the fortunes of people of color and other historically underserved groups.WASHINGTON — Six days after his inauguration, President Biden vowed that his administration would see everything through the lens of racial equality, making it “the business of the whole of government.”On Friday, his $6 trillion budget began to make good on that promise.Sprinkled throughout the president’s enormous spending plan are scores of programs amounting to tens of billions of dollars intended to specifically bolster the fortunes of Black people, Asian people, tribal communities and other historically underserved groups in the United States.Mr. Biden is not the first president to spend money on such programs. And civil rights advocates said the budget released on Friday fell short in some critical areas like student loans, where they say even more money is needed to rectify a longstanding lack of fairness and a lopsided burden being carried by minorities.“It’s going in the right direction, but it’s not a perfect document,” said Derrick Johnson, the president of the N.A.A.C.P., who said he was disappointed that the president’s budget did not call for canceling student loan debt, which falls disproportionately on Black Americans.But he added that his organization was pleased that the president was “continuing to make one of his priorities equity” via the budget.That idea — of focusing special attention on the distribution of taxpayer money across racial groups — has never been approached as methodically as it has this year by Mr. Biden, advocates say. Asked about the president’s equity agenda on Friday, Shalanda Young, the president’s acting budget director, said her department had “built that in” to the overall spending plan by giving “clear directions to our agencies that they are to use that lens as they implement these programs.”“This is not something we should have to call out,” she said. “This is something that should be pervasive in how the government does its business.”Much of the president’s vast budget directs spending that is not explicitly distributed based on race: health care, education, the military, transportation, agriculture, retirement programs and foreign policy, among other areas.But within all of those programs, Mr. Biden’s team has proposed increased spending with the goal of ensuring that people of color and others who are often left behind get a bigger share of the overall pie.Among the budget items, big and small, that are driven by equity:$3 billion to reduce maternal mortality and to end race-based disparities in maternal mortality.$15 billion for “Highways to Neighborhoods,” a program that would reconnect neighborhoods cut off by infrastructure projects developed decades ago.$900 million to fund Tribal efforts to expand affordable housing.$936 million for an Accelerating Environmental and Economic Justice initiative at the Environmental Protection Agency.$110 million for a Thriving Communities initiative, to foster transportation equity through grants to underserved communities.$39 billion for tuition subsidies to low- and middle-income students attending historically Black colleges and universities and those serving other minority groups.Mr. Biden foreshadowed that kind of budgetary decision-making in his first days in office. In a speech announcing his “equity agenda,” the president said he was committed to going further than his predecessors when it came to considering groups that had, in his words, been too often left behind.“We need to open the promise of America to every American,” he said during the speech on Jan. 26. “And that means we need to make the issue of racial equity not just an issue for any one department of government.”That approach has incited anger from conservatives, who accuse the president and his advisers of pursuing a racist agenda against white Americans. Fox News ran a headline accusing Mr. Biden of trying to “Stoke Nationwide Division With ‘Racial Equity’ Push.” And The New York Post published an editorial, titled “In Push for Woke ‘Equity,’ Biden Abandons Equality,” that accused the president of being “un-American.”The budget contains “Highways to Neighborhoods,” which reconnects neighborhoods cut off by historic infrastructure projects, such as Claiborne Avenue in New Orleans.Abdul Aziz for The New York TimesA group called America First Legal, which is run by Stephen Miller and Mark Meadows, two top aides to former President Donald J. Trump, won a preliminary injunction this week from a Texas judge against an effort by Mr. Biden’s Small Business Administration to prioritize grants from its $28.6 billion Restaurant Revitalization Fund to businesses owned by minorities or underserved groups.“This order is another powerful strike against the Biden administration’s unconstitutional decision to pick winners and losers based on the color of their skin,” the group said in a statement.The president appears unlikely to back down. In a speech days after his inauguration, he vowed that “every White House component, and every agency will be involved in this work because advancing equity has to be everyone’s job.”Still, for all of Mr. Biden’s forceful rhetoric — he once pledged to no longer allow “a narrow, cramped view of the promise of this nation to fester” — his administration made little effort on Friday to focus attention on that principle or to highlight details about how an equity-driven approach would change the way the government spends its money..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 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ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-1jiwgt1{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;margin-bottom:1.25rem;}.css-8o2i8v{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-8o2i8v p{margin-bottom:0;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-1rh1sk1{margin:0 auto;overflow:hidden;}.css-1rh1sk1 strong{font-weight:700;}.css-1rh1sk1 em{font-style:italic;}.css-1rh1sk1 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#ccd9e3;text-decoration-color:#ccd9e3;}.css-1rh1sk1 a:visited{color:#333;-webkit-text-decoration-color:#ccc;text-decoration-color:#ccc;}.css-1rh1sk1 a:hover{-webkit-text-decoration:none;text-decoration:none;}During a news conference to introduce the budget on Friday, Ms. Young and Cecilia Rouse, the chairwoman of the White House’s National Economic Council — both of whom are Black women — did not mention the president’s equity agenda until a reporter asked about it toward the end.And the budget itself does not try to quantify the effect of following the president’s guidance to make decisions based on a sense of racial equity. There is no “equity” section of the budget. Aides did not send out fact sheets to reporters on Friday promoting the “equity spending” in the president’s inaugural budget.That left some of the public relations work to civil rights groups and other advocates, who quickly pointed to examples of spending that would benefit communities who had traditionally been left behind by previous presidents.Sara Chieffo, the chief lobbyist for the League of Conservation Voters, an pro-environment group, pointed to the $936 million Accelerating Environmental and Economic Justice initiative at the Environmental Protection Agency, which is aimed at cleaning up the environment in underserved communities.“The importance of this administration’s proposal to make the largest-ever investment in communities of color and low-income communities who have been subjected to environmental racism for decades cannot be overstated,” Ms. Chieffo said.Marcela Howell, the president of In Our Own Voice: National Black Women’s Reproductive Justice Agenda, praised the president for investing in programs that specifically benefit Black women.“Kudos also go to President Biden for funding important programs to address racial equity and economic security,” she said in a statement, adding that “we applaud the proposed investments in infrastructure and job creation, affordable child care and work force training, education” and more.The Planned Parenthood Federation of America issued a statement thanking Mr. Biden for what the group called “important investments” that it said would help to “address the maternal mortality crisis and its devastating impact in communities of color.” More

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    Here's One Thing Missing from President Biden's Budget: Booming Growth

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    For all the administration’s focus on transformational policies, it’s not forecasting an outburst of economic potential.President Biden’s budget proposal includes billions of dollars for clean energy, education and child care — ideas being sold for their potential to increase America’s economic potential. One thing it does not include: an outright economic boom.In the assumptions that underpin the administration’s budget, economic growth is strong in 2021 and 2022 — but strong enough only to return the economy to its prepandemic trend line, not to surge above the trajectory it was on throughout the 2010s.Then in 2023, the administration expects gross domestic product, the broadest measure of economic activity, to rise at a slower 2 percent rate, then 1.8 percent a year through the mid-2020s. That is lower than the 2.3 percent average annual growth rate experienced from 2010 to 2019.The administration’s outlook is consistent with projections by other forecasters, including at the Congressional Budget Office and in the private sector. But it means that the Biden White House is not — at least not formally — expecting the kind of rip-roaring growth that characterized periods like 1983 to 1989 (with an average annual G.D.P. growth of 4.4 percent) and 1994 to 2000 (4 percent).Those two episodes coincided with much more favorable demographic trends. They also helped propel two presidents to comfortable re-elections.If the new projections were to prove accurate, it would imply two years of strong growth paired with moderate inflation as the nation recovered from the pandemic heading into the 2022 midterm elections, but then comparatively low growth in the run-up to the 2024 election.The sober estimate contrasts with the approach Mr. Biden has taken to selling his agenda publicly. The framing of his signature plans for infrastructure and family support has been that they will enable the economy to become more vibrant and productive.“There’s a broad consensus of economists left, right and center, and they agree what I’m proposing will help create millions of jobs and generate historic economic growth,” Mr. Biden said in an address to Congress in April.It is a striking contrast with the approach taken by the Trump administration — a gap between presidential styles buried on Table S-9 of the two presidents’ budgets. The Trump administration’s final prepandemic budget proposal, published in February 2020, forecast that the economy would grow around 3 percent per year throughout the 2020s.If the Trump projections materialized, by 2030 the economy would be more than 11 percent bigger than what the Biden projections envision. However, the Trump administration persistently underdelivered on growth. G.D.P. rose an average of 2.5 percent in the three nonpandemic years of his presidency. The results are weaker still if you include the contraction of the economy in 2020.A wind farm in Carbon County, Wyo. The Biden administration says investment in clean energy will help America fulfill more of its long-term potential.Benjamin Rasmussen for The New York TimesCasey B. Mulligan, a University of Chicago economist who worked in the Trump White House, said in an email that the reduced growth forecasts were similar to those that career economic staff recommended in the Trump years. “They perennially overestimated Obama-era growth and underestimated Trump nonpandemic growth,” but you couldn’t see it in the published documents in the Trump years “because normally the political appointees such as me have a say in what is published.”The Biden administration has been inclined more broadly to a strategy of underpromising and overdelivering, most notably with the rollout of vaccines.Even before the budget’s official release, its growth projections became a subject of Republican attacks. “The Obama-Biden administration famously accepted slow growth as America’s ‘new normal’ while pursuing policies that sent jobs overseas,” House Republicans on the Ways and Means Committee said in a blog post. “President Biden appears to be lowering the bar even further.”Political volleys aside, it can be easy both to overestimate the ability of government policy to move the dial on overall growth — and to underestimate how much even small gains in productivity can mean when they compound over many years.In the 1980s boom, for example, the labor force was growing much more rapidly than it is now, helped by demographic trends and a rise in women entering work. In the 1990s boom, a surge in productivity resulted in large part from innovations in information technology, unconnected to government spending.“We are a really big economy where really big forces are shaping what happens to G.D.P. growth,” said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution and a former C.B.O. chief economist.Even these moderate projections by the Biden administration imply that its policies will lift growth in economic activity by a few tenths of a percent each year over a decade. This is significant when comparing it with the growth that would be expected by simply looking at demographic factors and historical averages of productivity growth. The forecast is more inherently optimistic about Mr. Biden’s policies — and their potential to increase productivity and the size of the work force — than it might seem at first glance..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-1jiwgt1{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;margin-bottom:1.25rem;}.css-8o2i8v{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-8o2i8v p{margin-bottom:0;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-1rh1sk1{margin:0 auto;overflow:hidden;}.css-1rh1sk1 strong{font-weight:700;}.css-1rh1sk1 em{font-style:italic;}.css-1rh1sk1 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#ccd9e3;text-decoration-color:#ccd9e3;}.css-1rh1sk1 a:visited{color:#333;-webkit-text-decoration-color:#ccc;text-decoration-color:#ccc;}.css-1rh1sk1 a:hover{-webkit-text-decoration:none;text-decoration:none;}“Making the claim that your fiscal policies will boost growth by four-tenths of a point seems optimistic, but I can see how they could get there,” she said.Jason Furman, the Obama administration’s former top economist, said: “I think there’s a problem that people have in their head — more extravagant ideas about what economic policy can do and how quickly it can do it. When you’re talking about productivity enhancement, you’re talking about compounding that becomes a big deal for a long time.”In other words, the difference of a few tenths of a percent of G.D.P. growth might not mean much for a single year, but a gap of that size that persists for many years has a big impact on living standards.Some of the administration’s policies, by design, would focus on the very long-term impact on the nation’s economic potential. For example, additional money for community colleges might actually depress the size of the labor force, and thus G.D.P., in the short run if more adults go back to school. But it would then increase those workers’ productive potential, and thus contribution to growth, for the decades that follow.Conservatives, for their part, view the Biden agenda as likely to restrain growth, particularly once tax increases and new regulatory action go into effect. Mr. Mulligan, the Trump adviser, said he believed the Biden agenda would reduce the nation’s growth path by around 0.8 percentage points a year compared with its Trump-era trajectory. Douglas Holtz-Eakin, president of the American Action Forum, said he thought Mr. Biden’s policies could create faster growth in the short term but slower growth in the long run because of taxes and spending.The Biden White House is more optimistic about what is possible for American workers. After the post-pandemic recovery, it projects a 3.8 percent unemployment rate from 2023 on, which is a bit lower than the levels forecast by the C.B.O. (an average of 4.2 percent from 2023 to 2031) or the Fed (4 percent is the median longer-run unemployment forecast of its leaders). It’s also lower than the 4 percent post-2023 jobless rate included in the Trump budget.The administration is optimistic about the post-pandemic recovery in the job market, projecting a 3.8 percent unemployment rate from 2023 on.Hannah Beier for The New York TimesThis reflects the lessons of 2019, when the jobless rate was consistently below 4 percent without causing excessive inflation or other problems. It’s a welcome sign for anyone who thinks that running a tight labor market — a high-pressure economy, as Treasury Secretary Janet Yellen calls it — is a good thing.Forecasts, on their own, aren’t worth more than the paper on which they are printed. A bold prediction of the boom that’s coming wouldn’t mean much if it didn’t materialize. And the world described in the Biden team’s forecasts is hardly a gloomy one: Low unemployment, low inflation and steady growth is a nice combination, and one that could describe much of the period from 2016 to 2019.The question for Mr. Biden is whether that will be enough to qualify as building back better. More