President Joe Biden released the 2022 fiscal budget plan, which amounts to the tune of $6 trillion, an amount set to increase to $8.2 trillion by the year 2031.
President Biden released quite an ambitious budget plan which should take effect October 1 this year when/if the chamber of congress approves. The president wants the federal government to spend $6 trillion in the fiscal year and the total spending to rise to $8.2 trillion by 2031. This will take the country to its highest sustained level of federal spending since World War II, running a deficit of $1.3 trillion over the next decade.
The budget spending detailed in New York Times has its heavy focus in the following core areas;
The environment protection agency (EPA) budget includes an allocation for climate change agencies under discretionary spending. A section that the Trump administration primarily underfunded.
Funding clean energy technology and tax breaks for companies deploying the technology aimed at fighting climate change
Cushioning the aftereffect of the coronavirus pandemic by tackling employment issues.
Rolling out the America Families Plan program aimed at boosting the social safety net by reducing education costs which saw an increase in the budget allocation to previous years.
Mandatory programs taking up a significant aspect of the budget as usual
Cutting of the defense budget to a decline of 21% with a renewed focus of a possible conflict with China
Funding to deal with migrants at the southern borders and many more aspects of the economy captured by the fiscal budget is detailed in the New York Times news blog.
The budget is quite an ambitious one for the Biden administration as it aims to tackle some prevalent issues with the socio-economic and security aspect of the country. But what many commentators, stakeholders are worried about is the increasing debt profile and source of funding the administration has proposed to use.
How Does Biden Intend to Fund The Budget?
According to the statement obtained from New York Times;
“The president would largely fund his plan by raising taxes on corporations and high earners, which would begin to shrink budget deficits in the 2030s. Administration officials have said tax increases would fully offset the jobs and families plans over 15 years, which the budget request backs up. In the meantime, the budget deficit would remain above $1.3 trillion each year.”
In the same breath, also promising tax breaks for companies in a bid to accelerate the deployment of clean-energy technologies.
The concerns are centered around a weakening US Dollar that has been the world’s global reserve currency since President Nixon removed the gold standard via steady federal printing and increasing international debt profile.
The Twin Problem of Dollar Printing and Increasing Debt Profile
Here is the DXY chart showing the strength of the US Dollar as compared to a basket of other top foreign currency
After topping the chart on March 20, 2020, the DXY market crashed 13% following the impact of the coronavirus pandemic, which was followed by the massive printing of the Dollar to sustain the economy and provide economic relief.
The following months saw an unprecedented increase in Bitcoin and the general cryptocurrency market until now to a record $2.2 Mcap trillion at its peak.
According to US Debt Clock, the national debt is currently at $50 trillion compared to US Federal tax revenue of only $3.9 trillion and a GDP of $26 trillion. This has been a concern to many financial analysts, financial commentators, and members of the public.
What Does This Mean for Crypto and DeFi?
In one word – Bullish! Analysts have warned of a further decline of the dollar since last year and an increasing rise of Bitcoin. Notable Bitcoin Lobbyist Anthony “Pomp” Pompliano and founder of Pomp Investments, predicts a further decline of the dollar in his Tweet.
Other analysts like d Plan B, creator of the Bitcoin S2F model, have also noted the rapid expansion of the Feds balance sheet.
Currently, the bitcoin market has seen a correction to more than 50% of its peak. At writing, BTC is still in a fierce battle with sellers as the market makes fresh attempts to revisit the $32,000 region once again.
Does President Joe Biden’s $6 trillion 2022 spending budget provide a bullish opportunity for the crypto and DeFi Market? Definitely yes, but no one knows what the next move will be in market dynamics. Tread carefully!
Source : bsc.news
Founded in 2020, BSCNews is the leading media platform covering decentralized finance (DeFi) on the Binance Smart Chain (BSC). We cover a wide range of blockchain news revolving mainly around the DeFi sector of the crypto markets. BSCNews aims to inform, educate and share information with the global investment community through our website, social media, newsletters, podcasts, research, and live ask me anything (AMA). Our content reaches hundreds of thousands of global investors who are active in the BSC DeFi space.