State Dining Room

3:54 P.M. EDT

MR. BATES:  Good afternoon.

Q    Good afternoon.

MR. BATES:  Today, we are pleased to welcome Shalanda Young and Cecilia Rouse to the briefing room to address your questions on the 2023 budget.  We have just a few announcements before they go into the President’s budget.

As we disclosed to all of you, this morning the President tested negative as a part of his regular testing cadence.  He was last tested Friday as a part of his regular testing rhythm and additional testing requirements for travel to and from Europe.

Moving forward, he will proceed on his regular testing schedule, and we will continue to update all of you out of an abundance of transparency. 

And, of course, we wish Karine and Jen speedy recoveries.  They are currently both following CDC guidance and will be back following a negative test.  Jen shared this morning that she’s feeling stir-crazy and will be back soon. 

First, on Judge Jackson.  Judge Jackson continued to build support last week after she spent over 20 hours in marathon confirmation hearings demonstrating her credentials, intellect, character, grace, and the value of her deep experience. 

She reminded the country of why the President chose her and why she has been endorsed by conservative judges, the Fraternal Order of Police, the International Association of Chiefs of Police, dozens of police chiefs and sheriffs who lead many of the busi- — busiest departments in the United States and 83 former state attorneys general from both parties. 

Polls keep showing that she has strong backing among the American people, with some indicating that she has the most support of any Supreme Court nominee since John Roberts, who she ties with and whom she shares — and with whom she shares a similar philosophy about judges serving as referees who decide cases based on the law and the facts. 

She has now met with more than a majority of the Senate and is continuing her engagement with senators today and throughout the week.  Judge Jackson responded to Republicans’ requests for in-person meetings by promising to sit down with any member who wanted to, and she is honoring that promise.

Something else that speaks to the strength of Judge Jackson’s qualifications — which a series of Republicans have affirmed make her unquestionably fit to serve on the Supreme Court — and to the strength of her record is the multitude of factchecks from the press, from retired judges, and from former prosecutors who have dismantled attacks brought by a small group of GOP senators. 

The truth is that every single one of the specific senators who joined in these bad-faith attacks on her sentencing record with respect to child pornography has voted for numerous Trump-nominated judges who sentenced defendants for the same crimes in the same fashion, below guidelines widely considered to be out of date across the judiciary and below what prosecutors sought, which is also a norm. 

For example, last week, the Washington Post factchecker wrote a piece headlined “These Trump Judges Failed Hawley’s Sentencing Test for Jackson.” 

The New York Times factchecking team also covered this, writing, “Critics of Jackson’s Child Sex Abuse Sentences Backed Judges with Similar Records.” 

The Trump-nominated judges they surveyed received broad support and even included 6th Circuit Judge Amul Thapar, who was on Donald Trump’s shortlist for the Supreme Court. 

This was all on top of a raft of other factchecks already establishing that the basis of these criticisms was dishonest. 

And then, in terms of the budget, as you heard the President discuss earlier today, he has released his second budget, which builds on historic deficit reduction his agenda is delivering by means of the fastest economic growth in almost 40 years, on top of record-breaking job creation and unemployment reduction in 2021. 

The President’s budget will help bring more jobs back to America, make us safer at home by increasing funding for police, and more secure in the world by investing in our national security and alliances. 

And it will pay for these crucial policies by asking the ultra-wealthy — the top one hundredth of 1 percent of Americans, in terms of income — billionaires, and hundred-millionaires to pay an income tax that’s aligned with what most people in the workforce pay. 

We encourage Republicans in Congress to support that approach rather than their proposal to raise taxes on half of working families and taking healthcare coverage away from millions while gutting protections for Americans with pre-existing conditions in order to hand out even more tax giveaways to the wealthiest.

Shalanda Young is joining us for the first time in the briefing room.  She is the Director of the Office of Management Budg- — and Budget, having been confirmed by the Senate with bipartisan support earlier this month.  As Director, she serves as a senior advisor to President Biden and plays a critical role in implementing the President’s vision across the executive branch. 

Previously, Shalanda was the Acting Director of OMB for the last year, and the Clerk and Staff Director for the House Appropriations Committee, where she oversaw the $1.3 trillion annual appropriations bills. 

We’re also joined by Cecilia Rouse, who has been here numerous times, who is the Chair of the Council of Economic Advisers and a member of the President’s Families Cabinet. 

As a quick introduction, she is a world-respected labor economist who recently served as Dean of the Princeton School of Public and International Affairs.  She previously served as a member of the Council of Economic Advisers in the Obama-Biden administration, and on the National Economic Council in the Clinton administration. 

And with that, I’m going to turn it over to each of them, who will give remarks, and then I’ll call on folks for questions. 

And then once we’re done, we’re happy to take more questions from you all throughout the day in the press office. 

DIRECTOR YOUNG:  All right.  Be nice to the newbie.  (Laughter.) 

For an OMB Director, this is like prom day, so I’m — (laughter) — very happy to be here with you today.

You’ve heard the President say this, you heard him say it this morning: Budgets are about values.  And his 2023 budget puts our values to work in three key ways.

First, it’s fiscally responsible.  The budget shows that we’re on track to reduce the deficit by more than $1.3 trillion.  This is the largest year-over-year decline in history and less than half of the deficit the President inherited.

And that’s no accident.  It’s a result of the President’s strategy to combat the pandemic and grow our economy — a strategy that has built on smart investments and helped jumpstart our recovery. 

And that strategy has paid off.  In 2021, we created more than 6.5 million jobs — the most our country has ever recorded in a single year.  Our economy grew 5.7 percent — the most in 40 years.  And the unemployment rate has fallen to 3.8 percent — the fastest decline in recorded history.  Because of that progress, we’re able to responsibly draw down emergency spending measures and increase revenues.

The budget outlines the President’s vision to expand on this progress.  Its investments are more than fully paid for through tax reforms, ensure corporations and the wealthiest Americans pay their fair share.  It achieves significant deficit reduction over the next decade.  And it ensures no one earning less than $400,000 pays a penny more in new taxes.

Second, the budget invests in security both here and abroad.  Here at home, it includes investments to keep our community safe, put more cops on the beat for community policing, fight gun crime, and advance criminal justice reform.

The budget also strengthens our military and leverages our renewed strength at home to meet pressing global challenges, making one of the largest investments in our national security in U.S. history.

Third, the budget will help us build a better America by investing in education; making more here at home; combating the opioid epidemic; driving medical breakthroughs, including in cancer; and taking on the mental health crisis.

The budget also makes clear that the President is committed to working with Congress to pass legislation that reduces the deficit, cuts costs for families, and expands the productive capacity of our economy.

These are all things we can make progress on together.  And we’re looking forward to working with Congress to advance these priorities for the American people.

Thank you.

CHAIR ROUSE:  Good afternoon.  This budget builds on the solid economic gains of the first year of this administration.  The recovery over the last year has been extraordinary — quicker than independent forecasters had projected.

Over 2021, real output grew by 5.6 percent — the fastest since 1984.  The unemployment rate fell at its fastest pace since modern data began in 1948.  The labor force participation rate of Americans ages 25 to 54 grew by the most since 1979.

This robust recovery has put us in a strong position today.  The U.S. economy is more than 3 percent larger in inflation-adjusted terms than it was just before the pandemic — the fastest recovery in the G7.

Healthy household balance sheets and a strong labor market make us more resilient to external shocks.  The strong recovery has also put us in a better fiscal position as faster growth helps lower the deficit.

The budget builds on this solid economic growth.  It is a continuation of President Biden’s commitment to address longstanding issues in the economy and make investments that will ensure robust, sustainable, and equitable growth.

First, the budget is fiscally responsible.  Thanks to the American Rescue Plan, revenues are up and pandemic relief can slow down.

The result is deficit reduction, which will help ease long-term inflationary pressures and make our fiscal trajectory more sustainable.

Second, the budge- — the budget bolsters domestic and foreign security.  Increased security here and abroad not only protects lives, but it also reduces uncertainty, which allows economic activity the room it needs to renormalize and grow.

Third, the economy makes important investments in the American people.  A healthy, cared-for workforce is a productive workforce, and it lowers costs for families, easing price pressures over the longer term.

Now, I’d like to close with a word about our forecast.  In many ways, the forecast looks healthier today than it did when we locked it all the way back last November.

The economy has created, on average, 600,000 jobs per mo- — per month since then, including through the Omicron wave.  And the unemployment rate has fallen an additional 0.8 percentage point.

Challenges have also arisen since last November as well.  The most obvious is the Russian invasion of Ukraine.  This may well put upward pressure on energy and food prices.  That, in turn, could reinforce inflation, which was already an issue prior to the invasion due to the pandemic supply chain constraints and a strong demand for goods.

But as I said earlier, the strength of our recovery has put us on solid ground to weather economic shocks.  Independent forecasters anticipate that inflation will come down.  Americans are back to work, and the economy is strong.

The President’s 2023 budget presents a fiscally fair and responsible approach to continue to invest in America and meet future challenges.

MR. BATES:  Josh, would you like to start us?

Q    Director Young, Josh Boak with AP.  I want to understand the reserve fund for whatever comes out of negotiations with Congress.  You said on the call this morning that talks are “ongoing.”  The budget says, of the President’s priorities, they include the expanded Child Tax Credit, something that we previously believed was off the table.  Can you give us a sense of where negotiations are and what we could expect in terms of how active they are, such that you felt obligated to exclude those priorities from the total? 

DIRECTOR YOUNG:  One, let me start where you ended.  They’re not excluded.  What we didn’t do is detail things.  So we did not get ahead of negotiations. 

You probably heard that I spent a little time on Capitol Hill.  What we don’t do is get ahead of congressional negotiations.  We certainly don’t negotiate in public. 

The reserve fund is meant to hold revenues enough for whatever framework comes out of Congress. 

What we’re not doing is double counting revenue.  So the revenues we’re holding in the reserve fund are different.  For example, we’re not counting the savings from prescription drug reform in the deficit-neutral reserve fund.  That — they can use that if they want; we’re not counting that for our ‘23 budget. 

So, one, we’re not going to negotiate in public.  Two, we need to leave revenues for legislation.  And the President has consistently called on Congress to send to his desk.  And that that is, I think, as clear as I can be.

Q    Sure.  But it’s been an exhausting month, as we can all attest to, and I imagine that’s true for you as well.  Have you had any talks or negotiations with regard to this in the last month with members of Congress?

DIRECTOR YOUNG:  Look, I think a easy way to not get anything done is to negotiate in public.  We’re not going to do that.  The ‘23 budget I think is the responsible thing to do to hold enough revenues so Congress can use those if it wants, to send legislation to the President that reduces the deficit and reduces costs for the American people. 

MR. BATES:  Sabrina.

Q    Thank you so much.  You’re placing a lot of emphasis with this budget on deficit reduction.  Can you talk a little bit more about that?  Is it an effort to persuade Senator Manchin and other centrists who have raised concerns about the deficit?  Or does your administration believe that the deficit is, in fact, getting too high?

DIRECTOR YOUNG:  Let me remind you this President sent out a budget; this is his second one.  And in both budgets, he has paid for his proposals.  This is a classic Joe Biden budget. 

So, just as he did last year, we’re putting forward proposals that do two things: establishes a tax system that’s fair, where corporations and the wealthiest pay their fair share, but it has the added benefit of paying for needs of the American people, like reducing childcare. 

Q    And what other — what specific proposals, beyond the wealth tax, would lower the deficit by a trillion dollars over the next decade, as you say?

DIRECTOR YOUNG:  So, one, we’re already in the process — from last year to this year — of reducing the deficit by $1.3 trillion.  The proposals in the budget would also bring about another trillion-dollar decrease.  In addition to the billionaire income tax proposal that we have in the budget, we also believe that we should take the individual rate back to 39.6 percent, and also bring corporate — corporate tax rates back up — not even quite back up to where they were before the Trump tax cuts.

MR. BATES:  Steve.

Q    Cecilia, you mentioned that the Ukraine invasion is going to have a — complicate — complicate inflation.  Could you talk a little bit more about that?  What should Americans express [sic]?  High — expect higher gasoline prices, food?  What do you think?

CHAIR ROUSE:  So, as the President just said, this is — this is an important — this is an important place for the United States.  This is an important moment for democracy. 

And — but what we do know is that Putin’s invasion of Ukraine will have impacts on both energy prices and food prices.  So, we — he has — as the President has said, we can expect that while our sanctions are going to have their focus and most of their impact on the Russian economy, that we can expect that we will see a bit of impact in the United States as well.

So, the first we’re seeing is some impact on gas prices and oil prices.  We can also expect, through fertilizer and energy prices, to see some impact on food. 

That said, the President is focused on doing what he can to ensure that those increases are contained and that they are not — that, you know, they’re doing what he can to ease them for the American people.  So that is — he’s worked with our partners to increase an additional 60 million barrels from the Strategic Petroleum Reserve.  And he has — he has other options on the table that he will be considering as they come up.

In terms of food prices, you know, the U.S. — we don’t expect a shortage here because we are net exporters.  But we are acutely aware of the fact that there are regions in the world that depend heavily on exports of wheat, in particular, and other grains from Ukraine and Russia.  And we’re working with our partners to ensure to min- — to minimize the impacts globally. 

MR. BATES:  Nancy.

Q    Just — for Dr. Rouse — just following up on what you said: How is the White House preparing to deal with those food shortages, particularly when it comes to wheat in places like Africa, the Middle East, and the developing countries?  And should U.S. farmers grow more wheat this year instead of corn and soybeans, given the possible food shortages?

CHAIR ROUSE:  So, first of all, we are a net exporter of many of those food commodities, and farmers respond to price signals.  And so, with the price of food rising, they will be responding by doing — making additional plantings and trying to take advantage of the increased price signals.  So the market will work as the market will work.

But the U.S. is working with our partners — USAID is right in the middle of it and other international food organizations — to get the food and to ease the price pressures for other countries around the world.

Q    And to just to follow up on that — I’m sorry, to follow up on that, is there — are you having — is there any — are you think- — I’m sorry.  Have you considered altering the sanctions to make it clear that there’s no restrictions on agricultural trade with Russia?

     CHAIR ROUSE:  So the sanctions have always had carveouts for humanitarian needs.  The focus of the sanctions was to be on Putin and his close circle but to not make — to minimize, to the extent possible, the impact on the Russian people. 

So there has been a carveout for humanitarian aid, and we will absolutely be working to ensure that they get the food that they need.

     Q    Can I follow up?

     Q    So you just —

     MR. BATES:  No — no, sorry.  Calling on the gentleman from USA Today.

     Q    Yeah.  Thanks, Andrew.  I want to follow up on what the administration has proposed in police funding.  So, $3.2 billion is for grants, local and state grants.  And then the other $30 billion — the White House has called it, quote, “mandatory resources to support law enforcement.”  What does it mean by “mandatory”?  And how will that money flow to, presumably, local governments and states for police forces?

     DIRECTOR YOUNG:  So, as you know, the budget — two major spending categories: discretionary, which will go through the appropriations process — that is where we’re asking for the $3.2 billion.  There are traditional accounts, like the community-oriented policing account in Byrne JAG that the Appropriations Committee already funds.  We’re asking for increases in those accounts.

     The mandatory side — it is a new proposal.  We would have to work with and are planning to work with the authorizers who typically move mandatory legislation on the parameters of that funding. 

But what is clear, and you heard the President talk about this earlier: In addition to cops on the beat, we want a community focus.  We also know that it takes a comprehensive approach, that police forces around the country should have mental health services, psychiatrists.  That’s why our community violence initiative — we’re asking for money not only in DOJ and in HHS on the discretionary side. 

     So the plan is, on the mandatory side — is a new proposal to work with those authorizing committees to ensure that it is both strong on the policing side but also have these wraparound services.

     Q    On the mandatory side, I mean, are there any goals in terms of how many more police officers could be added nationwide or any priorities — you’ve mentioned a couple of them, but in terms of what you want to see this money used on? 

     And how much leeway will police forces have versus it coming down from the federal government on where the money can go?

     DIRECTOR YOUNG:  As you know, these decisions are best made at the local level, not even — state, most often, when it comes to policing efforts. 

So my — what we plan on doing is working with the judiciary committees to ensure that we provide flexible enough funding but be very clear that we expect a community focus and also that we have the wraparound services necessary, including mental health services, to make sure that we bring down violence in our communities.

     Q    And when you talk about unemployment —

     MR. BATES:  MJ.

     Q    — do you take into account the millions —

     Q    You all have said that the —

     Q    — of Americans who have lost — who have left their job?  Do you take that into account?

     MR. BATES:  Sir, we’re calling on MJ.

     Q    You all have said that the inflation estimates for this budget were set in November and if the invasion were to be taken into account, the outlook would look pretty different.  So should we expect an updated analysis from this administration on that front to take into account the invasion?

     And also, just in terms of the timeline, do you all have an estimate for when people can expect things to level out again?  Can we expect that during this calendar year?

     CHAIR ROUSE:  So we will be doing a mid-session update of our budget later this summer.  That is typically what we do.  And obviously, for next year’s budget, it will be — we will use a new budget that will not be quite as old — at least for next year.

You know, outside forecasters who have been — you know, who are studying this as well — expect that inflation will be higher than they were anticipating back when we locked our budget, so then — at the beginning of the year before the invasion. 

     But they do expect that as we learn to maintain economic activity while we are still working through this pandemic; while we — while supply chains continue to improve — although, obviously, there is — there is uncertainty there with, for example, lockdowns in China, but we expect them to work through that — that we expect supply chain challenges to ease.  We do expect inflation to ease this year and into next year.
     MR. BATES:  So we have a 4:15 out, so we’re going to need to go.  But just send us any other questions you have in the press office (inaudible).

4:16 P.M. EDT               

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