President Joe Biden on Thursday released a $6.8 trillion budget that puts higher taxes on the rich, targets corporations and gives a huge injection of funding for social programs such as child care and paid family leave.
The plan includes raking in $5.5 trillion in tax revenues from the wealthiest Americans by raising the top rate for those making more than $400,000 from 39.6 percent from 37 percent and imposing a 25 percent minimum income tax on billionaires.
The president’s plan – which he says will reduce the deficit by $3 trillion over 10 years – would also nearly double the capital gains tax rate for investment to 39.6 percent from 20 percent and raise income levies on corporations.
Enough for the largest peacetime budget in history has also been proposed – including $842 billion for the Pentagon, a 5.2 percent pay rise for troops, $6 billion in support for Ukraine and Europe and $37 billion on the nuclear weapons program.
There are also billions set aside for a 5.2 percent pay rise for federal workers, support for refugees, more offshore wind farms and a $25 billion investment in border security.
‘My budget reflects what we can do to lift the burden on hard-working Americans,’ Biden said of his budget in remarks at a union hall in Philadelphia.
The huge budget is likely to be blocked in Congress, and Republicans have already called the plan ‘reckless’ and a ‘road map to fiscal ruin’.
It calls for $688 billion in non-defense discretionary spending – meaning money towards programs that aren’t mandatory like Social Security and Medicare. That’s a $47 billion increase over last year’s budget.
Discretionary programs – the only ones up for debate in Congress – make up about $1.9 trillion while mandatory programs account for about $3.9 trillion and interest on national debt accounts for $796 billion.
It will be dead on arrival in Congress but, instead, serve as a campaign template, showing Biden’s priorities as he seeks a second term in office.
WHAT ELSE IS IN BIDEN’S BUDGET
- $6 billion in support to Ukraine and Europe
- $37.7B for nuclear weapons
- $17.8 billion for violent crime
- 5.2 percent pay rise for troops
- $40 million to combat fentanyl trafficking
- $26 billion to strengthen the border – an $800 million increase over 2023
- $535 million for technology at border points of entry
- Funds to hire an extra 350 border agents
- $3 billion to help poor countries deal with global warming
- Funding for 100,000 police officers across the nation
It will set the stage for a clash of federal priorities with Republicans, who are demanding cuts to federal spending in order to bring down the deficit.
To pay for his expansions to social programs and stabilization of Medicare – all while cutting the deficit – Biden will enact a series of new taxes, including a 25 percent minimum tax on billionaires. That’s higher than the 20 percent he proposed last year.
White House Office of Management and Budget (OMB) director Shalanda Young told reporters the budget would extend the solvency of Medicare another 25 years.
The budget does not include a proposal to extend the solvency of Social Security, even as it emphasizes opposition to cuts to the program.
‘I would love to be a part of the debate where we can have serious discussion about proposals,’ Young said. ‘But let’s not forget, the number one threat to Social Security … is those on the other side of the aisle who say they want to cut benefits.
Social Security trust funds are projected to be depleted by 2034 if no reforms are made.
The president’s plan would also nearly double the capital gains tax rate for investment to 39.6 percent from 20 percent and raise income levies on corporations and wealthy Americans.
On the flip side, Biden proposes expansions to prekindergarten, child care, paid family leave, elder care, housing, the Child Tax Credit and Medicaid.
He also proposes spending $9.1 billion specifically to target China influence and $5 billion in new election assistance funding to be allocated over 10 years.
The budget calls for $25 billion to be spent on Customs and Border Protection, an $800 million increase over 2023. It calls for the hiring of 350 extra border guards and $40 million to combat fentanyl trafficking.
It also includes $17.8 billion, up $1.2 billion from last year, for law enforcement.
Many of these proposals – both the tax increases and social program expansions – were in his original Build Back Better package that could not pass Congress. Instead, Biden had to settle for the slimmed-down version, known as the Inflation Reduction Act.
They represent Democratic priorities but have no chance of passing the Republican-controlled House and it’s unclear if they could garner the 60 votes necessary in the Senate.
‘I do not believe raising taxes is the answer,’ Speaker Kevin McCarthy said of Biden’s budget on Wednesday.
President Joe Biden, pictured Thursday en route to Philadelphia, released a $6.58 trillion budget that includes sweeping new taxes on the rich
Biden’s proposal reverses several tax cuts put in place by former President Donald Trump: It increases the top tax rate for Americans making $400,000 to 39.6 percent from 37 percent and would increase the corporate tax rate to 28 percent from 21 percent.
His budget also calls for investors making at least $1 million to pay that 39.6 percent on their long-term investments, which are currently taxed at a 20 percent rate.
The budget includes provisions to lower the cost of insulin to $35 a month for everyone and increase affordable housing vouchers for another 200,000 people.
It calls for a paid family and medical leave program, administered by the Social Security Administration, that would pay workers for up to 12 weeks while they are caring for a sick family member or healing from an illness or traumatic incident. It would also offer three days’ bereavement after the death of a loved one.
New taxes in Biden’s budget
- Top tax rate raised from 37 to 39.6 percent
- 24 percent minimum tax on billionaires
- Capital gains tax rate nearly doubled from 20 percent to 39.6 percent
- Raise federal corporate income tax rate from 21 to 28 percent
- 20 percent minimum tax on unrealized gains for those with income/assets that add up to more than $100 million
- Quadruple stock buyback tax to 4 percent
- Close ‘carried interest loophole’ for private fund managers
The budget also includes billions to carry out Biden’s goal of cutting US emissions 50 percent by 2030 when compared to 2005 levels across different departments and $23 billion for ‘climate resilience’ — conservation and natural disaster response.
It also proposess $3 billion to help poor countries fight global warming.
Republicans have yet to release their budget proposal, but it’s expected to slash foreign aid and cut assistance to the poor, including food, health care and housing.
Each party’s plan will serve as the starting gun for negotiations between McCarthy and Biden over spending for fiscal 2024, which begins Sept. 1.
Much of what the federal government spends every year is mandatory spending set by federal law. That includes funding for programs such as Social Security. Another portion is made up of interest payments on the federal debt.
The two parties urgently need to agree on a budget as the nation runs up against a $31.4 trillion debt ceiling. McCarthy has insisted the GOP-led House will not agree to increase the debt limit unless there are cuts in the FY 2024 budget. Biden has stood stalwart against negotiating on the debt limit.
Republicans have not yet released their own budget, and Biden said Thursday he will sit down and go ‘line by line’ with the speaker to see what they can agree on once the GOP budget is out.
The Treasury took ‘extraordinary measures’ to move money around in January and give the nation until June to negotiate on a debt limit increase before the nation could default.
In its annual budget outlook last month, the nonpartisan Congressional Budget Office (CBO) projected interest payments on the national debt would reach $10 trillion over the next 10 years. It found that combined spending on Social Security and Medicare would almost double by 2033 – pushing $4 trillion and making up 10 percent of economic output.
House Republicans are expected release their own budget mid-April. They have been eyeing $150 billion in non-defense discretionary spending cuts to save $1.5 trillion over a decade and hold yearly spending increases to 1 percent.
In a post on the CBO’s website this week Swagel said Congress could ‘nearly stabilize’ growth of the debt by reducing deficits by an average of $500 billion a year for a $5 trillion savings over the next decade– far steeper cuts than either party is considering.
Meanwhile House Ways and Means Republicans are drafting a plan B for if McCarthy and Biden maintain their stalemate over the debt ceiling, edging the nation closer to a default.
The committee on Thursday is taking up a measure that would allow the Treasury to continue borrowing money to pay interest on the national debt if both parties cannot come to a budget agreement before funds run out — a sign that suggests they are not entirely confident the two sides will find agreement.
Sen. Chuck Grassley, top Republican on the Budget Committee, called the budget ‘reckless.’
‘Pres Biden’s FY2024 budget proposal is a roadmap to fiscal ruin. From its delayed rollout to its reckless taxes & out-of-control spending, this budget sends a clear message: Pres Biden doesn’t seem to give a rip abt keeping his promises or securing the fiscal health of our nation,’ he wrote on Twitter.
Rep. Jodey Arrington, R-Texas, chair of the House Budget Committee, slammed the blueprint in a statement.
‘Biden’s latest budget is more of the same bloated bureaucracy at the expense of working families, while sticking our grandchildren with the bill,’ he said.
House GOP leadership called the budget ‘out of control.’
‘President Biden is proposing out of control spending and delaying debt negotiations, following his pattern of shrugging and ignoring when faced with a crisis,’ McCarthy, Majority Leader Steve Scalise, Majority Whip Tom Emmer, and Republican Conference Chairwoman Elise Stefanik said in a statement.
‘This is a spending problem, not a revenue problem,’ they said. ‘President Biden’s unserious budget proposal includes trillions in new taxes that families will pay directly or through higher costs.’