President Biden’s FY 2022 Budget

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Chris Kearney | NSWA Vice President, Governmental Affairs

The  Biden Administration has released its initial – commonly known as  “skinny” – FY 2022   Budget Request – with full budget to be released in the coming weeks (detailed breakdown by agency, details on specific program, etc.), likely in May or June.  

The budget proposes a $1.5 trillion spending plan that calls for an overall 16% increase for domestic programs over FY 2021 enacted, but only a 1.7% increase to defense accounts (which would amount to a 0.4% decrease in defense spending in real terms, adjusting for inflation). 

Specifically, the budget proposal suggests $769.4 billion in non-defense discretionary spending in FY 2022, a $105.7 billion increase over the FY 2021 level of $663.7 billion. Defense spending would rise to $753 billion, $12.3 billion greater than its current level of $740.7 billion. Overall, base discretionary spending would increase by $118 billion, from $1.4 trillion to $1.5 trillion, not including emergency spending.

In terms of the politics, the budget plan is likely to be rejected by Republicans, which could spell trouble for the timing of the FY 2022 appropriations process, especially given the 50-50 split in the Senate. While Democrats can move forward with bills out of committee, Republican support will be necessary to garner the 60 votes needed in the Senate to pass any appropriations bill to fund the government by the September 30, 2021 deadline.

Excerpts of note from the Biden Budget summary:

Tackles the Climate Crisis

Climate change is one of the greatest challenges of our time.  Yet it is also an opportunity to create new industries and good paying jobs that provide the chance to join a union, revitalize America’s energy communities and the economy, and position America as the world’s clean energy superpower.  The discretionary request includes major new climate change investments — an increase of more than $14 billion compared to 2021 — across nearly every agency to invest in resilience and clean energy, enhance U.S. competitiveness, and put America on a path to achieve net-zero emissions no later than 2050 — all while supporting communities that have been left behind and ensuring that 40% of the benefits from tackling the climate crisis are targeted toward addressing the disproportionately high cumulative impacts on disadvantaged communities. 

Propels an Effort to Create 250,000 Jobs Remediating Abandoned Wells and Mines 

The discretionary request includes over $550 million to remediate thousands of oil and gas wells and reclaim abandoned mines. This more than triples the current annual discretionary funding, building on the President’s commitment to create 250,000 good-paying union jobs for skilled technicians and operators in some of the hardest hit communities in the Nation, while cleaning up hazardous sites. 

In line with the Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization, the discretionary request more than doubles funding for the Economic Development Administration’s (EDA) Assistance to Coal Communities program. 

EDA’s efforts are part of the POWER+ Initiative and complement other targeted investments across the Federal Government to assist workers who have been affected by job losses in coal mining, plant operations, and coal-related supply chain industries due to the changing economics of America’s energy sector.

Creates Good-Paying Jobs Building Clean Energy Projects

Transforming the U.S. electricity sector — and electrifying an increasing share of the economy — represents one of the biggest job creation and economic opportunity engines of the 21st Century.  That is why the discretionary request provides $2 billion to put welders, electricians, and other skilled labor to work building clean energy projects across the Nation. This investment supports a historic energy efficiency and clean electricity standard that would transform the electric sector to be carbon-pollution free by 2035 and create good-paying union jobs.

Spurs Innovation in Clean Energy Technologies

The discretionary request invests more than $10 billion — a more than 35% increase over 2021 — in clean energy innovation across non-defense agencies. These investments would help transform the Nation’s electric, transportation, building, and industrial sectors to achieve net-zero carbon economy by 2050.  

Possible Next Steps On Infrastructure Legislation

With Congress just back from its two-week Easter Recess, House Speaker Nancy Pelosi (D-CA)  has expressed a goal of having an infrastructure bill passed in the House by July 4, with the legislation moving through the Senate to the President’s desk before Congress’ traditional August break. Earlier this month, President Biden introduced his outline for a $2.25 trillion infrastructure package to include both traditional transportation, water, and flood control projects coupled with some non-traditional provisions like childcare, elderly care, and family tax credits, and included increased corporate tax rates to help pay for it.

Meanwhile, House Transportation and Infrastructure (T&I) Committee Chairman Peter DeFazio (D-OR) announced a May markup of their surface transportation infrastructure proposal, which could gather steam in the House as a vehicle for other infrastructure provisions and align with the Speaker’s goal of House passage before July 4. 

While bipartisanship has not been ruled out on infrastructure legislation, there has been much talk about the Democratic-controlled Congress again using the “budget reconciliation” process to bypass Republicans to pass a bill, as was done with the massive $1.9 trillion COVID relief package last month. Reconciliation is essentially a legislative mechanism that, generally speaking, limits the scope of what can be passed to items that raise or save the federal government money – including tax related measures – and can pass with just 51 votes. Republicans have not been supportive of the Biden infrastructure plan in both scope and its proposed tax increases, which does not bode well for any bipartisan legislation on infrastructure this Congress.

While budget reconciliation could work for some infrastructure spending, it may not work where programs need to be authorized (or reauthorized for an existing program). An authorization is equal to establishing the equivalent of a credit limit on the federal credit card for a specific program to accommodate desired changes in program delivery or priorities like combating climate change.

And some moderate Senate Democrats – notably Sen. Joe Manchin – have expressed concern with President Biden’s proposed increase in corporate income tax rates to pay for the bill, thus raising uncertainty over whether even budget reconciliation could pass in the Senate.

NSWA Governmental Affairs VP Chris Kearney will monitor developments on both issues and share any additional details as appropriate.

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