On-the-Record Press Call by OMB Acting Director Shalanda Young and CEA Chair Cecilia

Via Teleconference

11:05 A.M. EDT

MR. FRIEDLANDER:  Hey, everyone.  This is Rob from the OMB Communications team.  Thanks so much for joining us.  This will be an on-the-record call about the President’s Fiscal Year 2022 Budget.

We will be joined by Shalanda Young, Acting Director of OMB; as well as Cecilia Rouse, Chair of the Council of Economic Advisers.  They’ll each make some brief comments at the top, and then we’ll have time to take some questions at the end.

As a reminder, this call will be on-the-record and embargoed until 1:30 p.m. Eastern Time today, along with the materials you’ve received also under embargo until 1:30 p.m. today.

And with that, I will turn it over to Acting Director Young.

ACTING DIRECTOR YOUNG:  Well, thanks, Rob.  And thanks to all of you for joining.  I want to start with a very quick overview of this year’s budget process, which, many of you know, looks a little different in a transition year.

Back in April, we released the topline information for the President’s discretionary request for Fiscal Year 2022, which provided Congress with guidance on his funding priorities to help inform the appropriations process.

That discretionary request recommended that Congress reinvest robustly in areas like public health, education, basic science, and clean energy.  The country had been weakened by a decade of disinvestment in these areas, which were squeezed under restrictive budget caps.  The discretionary request issued a clear call for Congress to reinvest in these areas, restoring nondefense appropriations to its historical average share of the economy.

Additionally, the President also unveiled his American Jobs Plan and American Families Plan.  Together, these two will be transformational: strengthening our economy, boosting American competitiveness, and delivering shared prosperity and economic security.

Today, we’re releasing a budget that puts these pieces together and does exactly what the President told the country he would do: grow the economy, create jobs, and do so responsibly by requiring the wealthiest Americans and big corporations to pay their fair share.

Already, we know that the President’s economic plan is working.  New unemployment claims are down 60 percent since he took office, the economy created more new jobs in the President’s first 100 days than the first 100 days of any President on record, and growth is stronger than anyone expected.  And this budget outlines the next steps in that plan.

The budget investments — the budget starts with the American Jobs Plan — a once-in-a-generation investment in America that will put millions of people to work rebuilding our country — fixing highways, rebuilding bridges, and upgrading our transit systems; replacing all lead pipes and service lines in our drinking water systems; investing in the infrastructure of our care economy and creating new and better jobs for caregiving workers; and much, much more.

The budget also includes the President’s American Families Plan — a historic investment in the middle class and in the pathways to the middle class, including education, healthcare, and childcare. 

And the budget also incorporates the President’s discretionary request.  For example, it calls for $6.5 billion to launch ARPA-H — a historic 20-billion-dollar increase for Title I schools to advance educational opportunity for all students; the largest budget authority increase at the CDC in nearly two decades to help rebuild its capacity to detect, prepare for, and respond to emerging global threats; and $36 billion in discretionary climate investments, just to name a few. 

And finally, the budget reiterates the President’s strong call to Congress during his joint address to move on healthcare — reducing the costs of prescription drug, and expanding and improving health coverage.

Put together, this budget is an agenda for robust, durable economic growth and broadly shared prosperity.  It will deliver a strong economy now and for decades into the future.  And it is in an investment in Americans all across the country who power our economy.

The budget makes these investments in a way that’s responsive to both the near- and medium-term economic landscape, as well as the long-term challenges our country faces.

In the near-term, the decades-long, global trend of declining interest rates, even as publicly held debt has increased, gives us the fiscal space to make necessary upfront investments.

Under the budget policies, the real cost of federal debt payments will remain below the historical average through the coming decade, even as the budget assumes that interest rates will rise from their current lows, consistent with private-sector forecasts.  Low real debt service payments show that the cost of these upfront investments is not burdening the economy.  To the contrast, failing to make these investments at a time of such low interest costs would be an historic missed opportunity that would leave future generations worse off.

This budget does not make that mistake, and it invests — its investments will pay dividends for generations to come. 

Over the long run, when we face larger fiscal challenges and more uncertainty about interest rates, the budget will reduce the deficit and improve our nation’s finances.

That’s because its frontloaded investments are more than paid for through permanent tax reforms that will ensure corporations and the wealthiest Americans pay their fair share.

You’ll see, in summary tables that all of you should have, that the budget policies reduce annual deficits beginning in 2030 and by increasing amounts thereafter. 

It also shows that the budget policies reduce deficits in every year beyond the 10-year window and by over $2 trillion in the subsequent decade.

And it also shows that the American Jobs Plan and the American Families Plan are fully offset within 15 years.

So, as a whole, the budget will improve our nation’s long-term finances while making the growth-enhancing investments that we need right now.

With that, let me turn it over to Chairwoman Rouse to talk about the budget’s economic assumptions and the economic outlook under the budget’s policies.

CHAIR ROUSE:  Thank you.  And thank you for you time today.  I want to use this opportunity to cover two important elements of the budget: the economic motivation and the economic forecast behind its policies.

As Acting Director Young just mentioned, this is a very important and forward-looking budget.  The policies proposed are premised on the idea that, to move forward as a country, we need to invest in innovation.  And the public sector is critical to building a robust and inclusive economy. 

When the government invests in infrastructure and families, it acts a partner, not a rival, to private business.  When it underinvests in these public goods, it diminishes the private sector’s productivity and its ability to grow, hire, and invest.

Moreover, when the public sector doesn’t fulfill its side of the partnership with the private sector, the harm is not equally felt.  Low-income neighborhoods and communities of color bear the brunt of the harm.

A robust — a robust body of economic evidence has found that investments like these in the budget pay off for years to come in the form of stronger economic growth, less reliance on transfer benefits, and greater tax revenue.

The President has proposed a comprehensive tax plan to offset these investments by asking corporations and wealthy individuals to shoulder their fair share of the tax burden.

Most importantly, it is imperative that this country makes up for decades of underinvestment in important parts of our country, which, as I noted earlier, will pay off in the long run.

Typically, when policies like this are proposed, they are baked into the budget forecast.  And typically, a three-months’ difference between when a forecast is done and when the budget is proposed is not really a big deal.

But I don’t need to tell you that this year was unlike any other in modern history.  When we did the forecast in early February, the world looked much different than it does today. 

At that point, it was unclear how we could successfully stand up a national vaccination program, how fast we could get those shots into arms, how effective the shots would be, and how much vaccinating a nation would free up consumers to spend and businesses to reopen.

In addition, the American Jobs Plan and the American Families Plan — the cornerstone of the budget — were in the early stages of development. 

That February forecast projected real GDP growth at 5.2 percent in 2021, and 3.2 percent in 2022.

We began the year with a 6.3 percent unemployment rate and expected it to fall to 5.5 percent by the end of 2021, and 4.1 percent by the end of 2022.

We also expected short-term interest rates to rise slowly as the economy approached full employment and inflation to stabilize around 2 percent.

There are two important reasons why our current economic reality looks different from our February forecast.  First, the economic reality on the ground, as summer looms, is very different than last winter.  Recovery and real GDP has outperformed our expectations thus far.  More than half of adults in the United States have been fully vaccinated, accelerating a full reopening.  The consensus forecast for real GDP growth during 2021 has climbed from 5.0 to 7.0 percent. 

Aside from GDP, two other components of the forecast that have been revised up as well: the consensus view about 10-year yield and the expectation for 2021 inflation. 

Second, as I noted earlier, the forecast does not fully reflect the policies proposed in the budget.  This is a solid —

a budget that reflects President Biden’s…

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