President Joe Biden’s recent release of his budget proposal for fiscal year 2025 has sparked worries among federal government budget analysts, who suggest that if approved, it could further escalate the already high inflation rates.
The proposed budget includes a series of targeted spending initiatives and tax increases projected to add a minimum of $14.8 trillion to the national debt by the conclusion of Biden’s presumed second term. Experts, speaking to the Daily Caller News Foundation, express apprehension that several provisions within the proposal might exacerbate inflationary pressures by perpetuating unchecked deficit spending, without effectively addressing the underlying causes of rising prices and affordability challenges.
Richard Stern, director of the Grover M. Hermann Center for the Federal Budget at the Heritage Foundation, highlighted concerns over the potential ramifications of the proposed measures, indicating that they could lead to a reduction in the real supply of goods and services, thus fueling inflation. He suggested that the Federal Reserve might respond by adopting contradictory policies, exacerbating inflationary pressures and driving interest rates higher.
Notably, inflation currently stands at a rate of 3.2% year-over-year as of February, marking an 18.5% increase since Biden assumed office in January 2021. The president’s prior economic initiatives, including the American Rescue Plan and the Inflation Reduction Act, have contributed to the ballooning deficit.
The proposed budget allocates $258 billion for the construction or preservation of two million housing units, primarily targeting lower- and middle-income households. However, experts argue that such federal funding may not effectively address housing availability issues, which are often hindered by local regulations rather than funding constraints.
Critics also point out the budget’s reliance on tax hikes, which could adversely impact economic competitiveness and ultimately lead to lower wages and higher consumer prices. Biden’s plan includes tax increases on high-income individuals, certain business owners, and large corporations, alongside the removal of tax cuts introduced during the Trump administration.
Despite recent economic growth, concerns persist regarding the substantial increase in the national debt, which currently stands at nearly $34.5 trillion, up from around $27.8 trillion at the beginning of Biden’s presidency. Experts caution that the proposed budget’s reliance on unsustainable deficit spending could have severe long-term consequences for the economy.
In summary, while Biden’s budget proposal aims to address various socioeconomic challenges, critics argue that its fiscal approach may exacerbate inflationary pressures and economic instability in the long run.
