The Biden Administration released its detailed Fiscal Year 2023 budget request on Monday, March 28. The budget request is only the second in a decade that is not limited by the low spending caps for annual appropriations required by the Budget Control Act. Highlights from select agency budgets are found in the articles that follow here.

Of the $5.8 trillion in projected FY23 spending included in the President’s request, $1.6 trillion is spending that must be annually appropriated by Congress, also known as discretionary spending; this is roughly 9 percent more than FY22 spending enacted recently. Of this, roughly $830 billion is for non-defense (domestic and international) discretionary (NDD) funding. This reflects a 14 percent (about $100 billion) increase over FY22 levels. Most education and housing programs fall into this category, plus many social service, public health, veterans’ services, criminal justice, homeland security, environmental and community development programs.

The budget also calls for $813 billion in defense discretionary funding, a roughly 4 percent ($31 billion) increase over FY22. While advocates praised the expansion of funding for human needs programs, many progressives have called for cuts to the defense budget. Republicans say the defense request amounts to a cut after accounting for inflation. While there is often a call for parity, or equal increases in defense and nondefense spending, Sen. Richard Shelby (R-AL), the top Republican on the Senate Appropriations Committee, said he may push for a larger boost to defense spending than nondefense for FY23.

The Biden Administration budget includes over $4 trillion in mandatory spending for FY23. Mandatory spending programs, including Social Security, Medicare, Medicaid, the Children’s Health Insurance Program, SNAP/food stamps, Temporary Assistance for Needy Families, and other basic safety net programs, do not require annual appropriations. Instead, Congress authorizes the way they spend money through legislation. Congress can cut or expand these programs by amending the legislation that authorizes them. The Biden Administration proposes to shift some programs from discretionary to mandatory, so that they would not require annual appropriations. Examples include the Indian Health Service and the Bureau of Indian Affairs. Congress has not in the past agreed to such proposals, so for purposes of comparison to previous years, our figures continue to include these programs as discretionary.

The proposal includes a reserve fund for many of the initiatives the House passed last year as part of the Build Back Better Act, which remains stalled in the Senate, that provide economic security and reduce costs for American families (and that under Senate rules can pass with only a simple majority instead of requiring at least 60 votes). These initiatives include the continuation of the expanded Child Tax Credit and Earned Income Tax Credit, reducing the cost of child care, health coverage and prescription drugs, expanded school meals and summer food for children, providing for free pre-kindergarten and free or reduced college costs, paid family leave, climate change mitigation, and more housing assistance. The budget does not set a specific amount for the fund, but indicates in summary statements that the Administration is “…preserving the revenue from tax and prescription drug reforms the President proposed last year for this legislation for the investments needed to bring down costs for American families and expand our productive capacity.” The budget materials state that the revenues set aside for this purpose will at least pay for the items negotiated for inclusion, and may go beyond that to add to deficit reduction.

On the revenue side, the Biden budget proposes to increase the corporate tax rate and reduce incentives for U.S. multinational corporations to shift profits and investments overseas. It also proposes a new 20 percent minimum tax on the income of individuals with more than $100 million in wealth, which would raise an estimated $360 billion over ten years. About 0.01 percent of taxpayers are worth $100 million or more, or about 20,000 households in the U.S. The budget projects that the deficit in 2022 will be more than $1.3 trillion lower than in 2021, the largest ever one-year decline. In total, the budget predicts $1 trillion in deficit reduction over the next decade.

In a statement, CHN’s Executive Director Deborah Weinstein said President Biden’s budget, “makes vital investments in our future, while providing economic and public health protections needed now. His comprehensive plan recognizes that, despite unprecedented growth, the many dislocations beyond any family’s control are currently putting economic strain on our people. The Biden budget offers protection from those dislocations in the short term and builds lasting economic security and opportunity.”

While the President’s budget as a whole does not move through Congress or become law, at minimum a president’s budget is a proposal to Congress used to signal an administration’s priorities.

It is unclear whether Congress will pass a budget resolution as it did in 2021. A budget resolution can contain instructions that can allow Congress to pass pieces of a president’s economic agenda using the reconciliation process, by which bills only need a simple majority to pass. However, the difficulty of using this procedure so far this year because of the objection of a few key Democrats means that House and Senate Democrats will likely not pursue this course of action a second time, later. Efforts are still underway to pass the economic package described above.

Nor is it necessary for Congress to pass a budget resolution in order to agree upon funding for annual appropriations. It is expected that the Democratic and Republican leadership of both the House and Senate Appropriations Committees will convene as soon as this week to begin discussions in the hopes of reaching an agreement on discretionary topline numbers so that work on appropriations bills can begin. As bipartisan support is needed to pass spending bills in the Senate, and with control of Congress in question following the November 2022 elections, it is considered likely that a stopgap spending measure, known as a Continuing Resolution, will be needed to keep the government funded from the start of the new fiscal year on Oct. 1 until after the elections.

Stay tuned to upcoming Human Needs Reports for additional analysis as the FY23 federal budget and appropriations process moves forward.

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