March Washington D.C. Report

President Joe Biden’s budget proposal has been released, and POLITICO Pro policy teams give insight on the most noteworthy takeaways.

QUICK FIX

— Health funding is unlikely to see fruition in its current state, as Medicare and federal family planning proposals are expected to face pushback from Republicans.   — Biden’s trade proposal reinforces his plan to “out-compete China,” with a focus on boosting Indo-Pacific ties.   — USDA budget includes plans to increase SNAP eligibility, along with tackling food and economic security for lower- and middle-income Americans.

AGRICULTURE USDA budget previews farm bill fight: Biden’s fiscal 2024 budget lays out the administration's priorities for the 2023 farm bill as negotiations on that massive bill kick into gear.   The White House asked for a 14 percent increase in the Department of Agriculture's budget, including hikes to child nutrition and climate programs — both of which are likely to be in House Republicans' crosshairs. Biden also called on Congress to allow SNAP benefits, formerly known as food stamps, to reach more people, including those who have been in jail.   And in its budget brief, the White House argued against the work requirements for SNAP that many Republicans favor. “Rather than reducing obstacles to employment, research demonstrates that time limits on SNAP eligibility amplify existing inequities in food and economic security,” the White House said in its budget brief.   Agriculture Secretary Tom Vilsack told reporters Thursday that the budget reflects Biden's desire to build the "middle class from the bottom up and the middle out."   The budget also asked for $1.2 billion in discretionary funds to the Natural Resources Conservation Service — which funds USDA’s conservation programs. It’s a $208 million increase over the 2023 enacted level. And it requested $316 million more than last year for the U.S. Forest Service, which the White House says would ensure no wildland firefighter is making less than $15 an hour.   "We understand the importance of the work that they do, and that we expect that we should be supporting them to have a job that is worthy of the risk that they are undertaking," Vilsack said of firefighter pay. — Garrett Downs and Emily Cadei

HEALTH CARE Biden's FY 2024 health budget likely to face GOP headwinds: Biden’s proposed fiscal 2024 budget offers a window into some of his health care policy concerns and highlights differences with the Republicans now in charge of the House.   The government funding plan, which is highly unlikely to survive intact, marks both an opening salvo in Biden’s 2024 campaign and a shot at Republicans seeking deep spending cuts. The document comes as Republicans seek fiscal concessions in return for helping to lift the debt ceiling later this year.   Biden’s proposal to expand Medicare drug price negotiation that last year’s Inflation Reduction Act introduced in limited fashion speaks to Americans’ concerns about health care costs.   His proposal to increase by more than $200 million funding for the federal family planning program aims at many Americans’ worries following last year’s Supreme Court decision that permitted states to ban abortion.   The lack of significant spending to fight Covid-19 also indicates the president’s plans to follow through on his pledge to end the public health emergency in May.   But the budget also suggests areas ripe for bipartisan action — especially around mental health care, cybersecurity and cancer research.   Some of Biden’s health care asks include: An overall HHS budget increase of 11.5 percent. Authority for CMS to negotiate prices for 40 drugs, up from 20 under current law. A 79 percent increase, to $512 million, for Title X — the federal family planning program that provides free and subsidized contraception, STD testing and other sexual health services. $150 billion over a decade for Medicaid home- and community-based services. $10.9 billion for global health initiatives and $20 billion for pandemic preparedness. Extension of Biden’s cancer moonshot research initiative at a cost of $1.8 billion over three years. Major funding increases for community mental health clinics, and suicide and substance abuse prevention. Republicans opposed the drug price negotiation provisions in the Inflation Reduction Act and are more likely to seek to roll those back, than to expand them. They’ve also said they see Medicaid as ripe for cuts. They are considering proposals to add work requirements, cap spending and repeal Obamacare’s Medicaid expansion. Many in the GOP are skeptical of cooperation with global public health bodies. Republican opposition to increases has kept Title X funding flat for the last nine years.   But Republicans will likely be more receptive to Biden’s desire to bolster mental health care.   The budget calls for bigger bucks for the administration’s roll out of Certified Community Behavioral Health Clinics, more money for HHS’ Substance Abuse and Mental Health Services Administration and the 988 crisis line, and an extra $200 million for the National Institute of Mental Health. It also boosts funding for the National Institutes of Health to facilitate more spending on research into the opioid and mental health crises.   The Senate Finance Committee in the last Congress began formulating bipartisan initiatives aimed at combating growing mental illness.   And there’s bipartisan concern about the vulnerability of health care organizations to hackers. The Biden plan seeks a significant funding bump for HHS’ Office for Civil Rights, which regulates health data security. The proposed budget is $78 million in fiscal 2024, up from $40 million.   Republicans will likely be skeptical of a push to boost the civil rights office’s efforts to enforce data security regulations, but they may be receptive to spending aimed at protecting health care organizations or helping them defend themselves. — POLITICO Health Care Staff

TRADE Budget aims to boost Indo-Pacific ties, with an eye towards China: A critical part of Biden’s strategy for countering China’s economic and security influence has been to deepen ties with Indo-Pacific nations. The fiscal 2024 budget proposal he unveiled Thursday provides a bit more detail on his plans to court those countries.   The big-ticket items include funding for investments in Indo-Pacific countries: There is $2 billion for “economic competitiveness and secure and resilient supply chains,” $2 billion for “hard infrastructure” and $2 billion to finance companies and development projects through the U.S. International Development Finance Corp.   The administration also requests $2.3 billion in discretionary funding for the State Department and U.S. Agency for International Development to “strengthen and modernize” alliances in the region. That money includes $90 million for the Association of Southeast Asian Nations and $50 million for Biden’s signature economic pact in the region, the Indo-Pacific Economic Framework.   Notably, Biden pitches the funding requests as part of his plan to “out-compete China.” Of course, China has always been a factor in the administration’s engagement in the Indo-Pacific, but it often downplays that reality to avoid spooking partners in the region. Thursday’s budget proposal was more direct.   The administration asks for $222 million for the Commerce Department's Bureau of Industry and Security to manage export controls and national security reviews, both tools that Biden officials have used to target sectors of the Chinese economy. The Commerce Department notes that the White House is “considering the establishment of a program to address national security risks associated with outbound investments” that does not “place undue burden on U.S. investors and businesses.” — Steven Overly

DEFENSE Biggest military budget ever. Will it be enough?: Biden is seeking $842 billion for the Pentagon — a 3.2 percent increase from the current level and the largest defense budget ever in nominal terms.   But defense hawks already are voicing dissatisfaction with the blueprint. Defense spending, they contend, must go considerably higher to compete with China and outpace inflation. Republicans have dinged Biden's budget as a real cut to the military and signaled they'll seek more money.   China and Russia are the top two challenges in Pentagon plans. That reality is highlighted by Biden's $9.1 billion request for the Pacific Deterrence Initiative to deter China and another $6 billion to continue support to Ukraine, NATO and other European partner nations.   Just under $38 billion would go toward DoD modernizing the nuclear triad and maintaining the arsenal. And troops and civilian workers would get a 5.2 percent pay raise. — Connor O’Brien

EDUCATION Never gonna give you up: Biden is still pressing for free community college and universal pre-K despite failing to pass his sweeping education agenda under a Democrat-led Congress during the first two years of his presidency. The two proposals were included in his fiscal year 2024 budget request to Congress that urged lawmakers to shore up funding for the Education Department by nearly 14 percent compared to the previous year.   Biden’s proposals are rooted in advancing equity in the nation’s schools. The president wants to boost funding for schools that serve students from high-poverty households by $2.2 billion. He also wants to subsidize tuition at four-year historically Black colleges and universities and other minority-serving institutions, and increase the Pell Grant, which is awarded to the nation’s lowest-income students. — Bianca Quilantan

TRANSPORTATION Biden takes a victory lap: Summary sheets released by the OMB reads a victory lap of the 2021 infrastructure law that injected some $500 billion in new spending into highways, bridges, transit and more. And beyond rhetoric, the boosted spending is reflected in the budget document, with significant plus-ups for virtually every account under the auspices of the Transportation Department.   That includes billions to state DOTs to spend on highway and transit projects, as well as $1.2 billion to continue the Mega Grant program, which aims to fund large, complicated, often multi-jurisdiction projects like the Gateway bridge and tunnel program in New York and New Jersey. — Kathryn A. Wolfe

TAX Few surprises with Biden tax plans: Biden’s plan will be familiar to anyone who’s been following the tax debate in Washington.   His 2024 budget plan recycles a number of proposals lawmakers have previously considered and rejected. If anything, those plans will likely face even tougher sledding this year with Republicans now in charge of the House. The two sides are deeply divided over taxes, and there are few must-pass bills this year that could force lawmakers to act.   Biden is seeking a big 15 percent funding increase next year for the IRS, which is sure to antagonize Republicans already unhappy with the $80 billion Democrats awarded the agency last summer.   With Republicans swearing off tax increases, other proposals stand little chance such as a plan to impose a new wealth tax on people with at least $100 million, and another proposal to raise $650 billion by expanding an investment surcharge created as part of the Affordable Care Act.   It’s possible lawmakers might be able to deal on the child tax credit, and the administration’s budget has a lot of ideas on how an expansion ought to look. It’s proposing to revive Democrats’ lapsed monthly payment program, though with a number of changes, such as having the Social Security Administration get involved in getting children enrolled. — Brian Faler