What to Know in Washington: Biden Budget to Begin Spending Talks

President Joe Biden will kick off congressional spending negotiations today when he sends lawmakers his full fiscal 2022 budget proposal, a document that’s sure to trigger debates over the nation’s fiscal health and the balance between military and domestic spending.

Lawmakers face tough debates about the size of the deficit, how much funding to provide the military, and whether to end a decades-old ban on federal funding for abortions, except in the case of rape, incest, or to save the life of the woman, Jack Fitzpatrick reports.

After receiving Biden’s proposals, they plan to quickly scramble through the budget and appropriations process this summer, partly because Biden’s budget is coming late, even compared to previous newly elected presidents. Negotiators may rely on a stopgap funding measure to avoid a shutdown after the Sept. 30 deadline to fund the government.

Lawmakers should hold bipartisan, bicameral talks in early June on top-line spending figures, Senate Appropriations Chairman Patrick Leahy (D-Vt.) said in a statement yesterday.

“When Congress returns in early June, it is essential that Congress, on a bipartisan and bicameral basis, work with the President to negotiate budget toplines so that we can commence the appropriations process for the fiscal year that begins October 1,” Leahy said.

Biden riled Republicans — and some Democrats — when he sent an initial budget request in April. Thin on details, the proposal called for a 16% increase in nondefense discretionary spending and a 1.7% boost for defense. Republicans said the defense figure was too small and progressives said it should have been cut to a lower amount.

Today’s proposal would increase federal spending to $6 trillion in the coming fiscal year, with annual deficits of more than $1.3 trillion over the next decade, according to documents cited by the New York Times.

The request will also offer a full accounting of Biden’s previously disclosed plans for trillions of dollars in new taxes and government spending while also revealing for the first time how the administration believes inflation, employment, and economic growth would be affected by enacting his agenda. Read more from Justin Sink.

Photographer: Al Drago/Bloomberg

Biden walks across the Ellipse near the White House after exiting Marine One in Washington, D.C., on Thursday.

Biden, Congress Face Test on Cyber Spending: Biden and members of Congress face a moment of truth when it comes whether they are willing to spend significant dollars to shore up U.S. cyber defenses. Three weeks after a ransomware attack crippled fuel supplies along the East Coast, Biden plans to unveil his spending request for fiscal 2022, where officials aim to boost cybersecurity funding. Simultaneously, Democrats and Republicans in Congress attempt to negotiate an infrastructure spending plan that may include cyber-related programs.

The budget debates “serve as an opportunity to test our seriousness of purpose, to learn whether we have the resolve to put our money where our mouth is,” according to David Kris, a former U.S assistant attorney general for national security and a founder of Culper Partners. Read more from Alyza Sebenius.

Happening on the Hill

Senate Poised to Sharpen China Rivalry With Chip Aid, R&D: The Senate is moving slowly toward passage of an expansive bill to bolster U.S. economic competitiveness and confront China’s rise, debating some last amendments before a final vote. The legislation cleared an initial procedural vote after a deal was struck between Senate Majority Leader Chuck Schumer (D-N.Y.) and Republicans on some changes to the bill. But the debate dragged into this morning as several Republicans demanded consideration of additional amendments and objected to voting without fully reading the lengthy bill.

Schumer had set a goal of passing the legislation before senators leave Washington for a scheduled week-long break. The chamber is in recess until 9 a.m. Read more from Daniel Flately and Laura Litvan.

• Separately, Commerce Secretary Gina Raimondo said Biden’s spending plans are focused on boosting U.S. competitiveness on the global stage, especially against China. His jobs plan “is all about competing with China: improve our education system, improve our infrastructure, invest in manufacturing,” she told Bloomberg TV. Read more from Payne Lubbers.

Biden Tax Hikes Rely on Richard Neal: Biden’s push for the first major federal tax increase since 1993 now rests on the shoulders of Rep. Richard Neal (D-Mass.), who joined the key tax-writing House committee that he now chairs during the battle for that last wave of increases. Neal says he learned a key lesson during the 1993 effort: Ensure that the tax increase that you vote for actually gets enacted, or you’re left politically all the more vulnerable, with no result to point to. When he and other House Democrats back then voted for an innovative tax on energy, it ended up dying in the Senate.

“It was this vacuous endeavor,” Neal, 72, recalled in an interview in his office at the U.S. Capitol this month. “We were stuck with a tax-increase vote and no policy achievement.” The episode serves as background to Neal’s current work figuring out what tax increases he can shepherd through a Democratic caucus that has razor-thin control of the House and Senate. Read more from Christopher Anstey and Laura Davison.

Ethics Questions Await Labor Board Pick: Biden’s pick to join the National Labor Relations Board could find herself in a job to help former union clients who took on McDonald’s in a high-profile board case due to a relaxed ethics precedent from the Trump era. NLRB nominee, Gwynne Wilcox, represented the union-backed Fight for $15 that accused the fast-food company of labor law violations in the biggest joint employer liability case in the agency’s history. Read more from Robert Iafolla and Ian Kullgren.

Politics & Influence

Special Election to Fill Haaland Seat: A special House election will fill a vacancy in New Mexico’s 1st congressional district, which Deb Haaland left in March to become Biden’s interior secretary. Democratic state Rep. Melanie Stansbury is favored over Republican state Sen. Mark Moores in the Democratic-leaning district around Albuquerque. A Stansbury win would bring the chamber to 220 Democrats and 211 Republicans, with four vacancies, Greg Giroux reports.

Redistricting and the Political Landscape: The once-a-decade fight to redraw the U.S. political map is rolling ahead as states learned this spring which ones would gain House seats and influence and which would lose seats based on the constitutionally mandated count of every person living in the U.S., which took place in 2020. BGOV offers a closer look at the 2022 political landscape in an OnPoint presentation.

Around the Administration

Today’s Agenda: Biden travels across the Potomac River to Virginia today, to participate in an event in Alexandria with Gov. Ralph Northam on the state’s fight against Covid-19. The president and First Lady Jill Biden then travel to Hampton, Va., where they will deliver remarks at 1:20 p.m. The Biden’s end their week with a trip at 3:30 p.m. to Wilimington, Del., for the weekend.

John Kerry to Join Korea Talks: U.S. climate envoy John Kerry will join climate talks being convened by a group of middle-income countries as diplomatic efforts intensify ahead of the crucial COP26 summit later this year. China’s Premier Li Keqiang and German Chancellor Angela Merkel are among leaders who’ll send video messages to the virtual Partnering for Green Growth and the Global Goals summit, known as P4G, being hosted from Sunday by South Korea. Kerry is scheduled to take part in live discussions Monday and a total of 47 national leaders will participate, presidential spokeswoman Park Kyung-mi said today in a briefing. Read more from Heesu Lee.

State Department Probes Possible Embassy Construction Bribes: The State Department’s internal watchdog is investigating a possible bribery scheme involving a department employee who was allegedly paid by a construction company for inside information that helped it win contracts to build U.S. embassies and consulates. The probe by the State Department’s inspector general was disclosed in a federal court filing unsealed in Washington yesterday. An employee in the department’s Overseas Building Operations division was paid to commit “corporate espionage against the Government” from roughly 2014 to 2017, according to the document. Read more from David Yaffe-Bellany.

Special Counsel Spends $1.5 Million in Probe of Russia Inquiry: The U.S. Justice Department released the first official expenditure report for the special investigation into the origins of the FBI’s Russia inquiry — providing a rare bit of insight into the secretive review more than two years after it was begun in response to demands by then-President Donald Trump. The inquiry being led by Special Counsel John Durham spent about $1.5 million from Oct. 19 to March 31, according to the report from the Justice Department released yesterday. Of that, Durham directly spent about $934,000, mostly on personnel, while Justice Department units spent about $520,000 to support the investigation, according to the five-page report. Read more from Chris Strohm.

Inequities Persist Even as U.S. Pandemic Wanes: The Covid-19 pandemic in the U.S. is likely to end the way it started—with Black and Latino residents suffering a disproportionate amount of the pain and suffering. Though things have improved for all Americans, Black people are still being hospitalized with Covid-19 at double the rates of White people, according to Covid-Net, a hospital surveillance network for the Centers for Disease Control and Prevention. Jonathan Levin has more.

Editor’s Note: Bloomberg Government’s What to Know in Washington will not publish on Monday due to the Memorial Day holiday. We will return on Tuesday.

To contact the reporters on this story: Zachary Sherwood in Washington at zsherwood@bgov.com; Brandon Lee in Washington at blee@bgov.com; Jack Fitzpatrick in Washington at jfitzpatrick@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Loren Duggan at lduggan@bgov.com; Michaela Ross at mross@bgov.com