President Joe Biden released a $6.8 trillion budget on Thursday that raises taxes on the wealthy, targets corporations and gives a huge infusion of funds to social programs like child care and paid family leave.
The plan includes collecting $5.5 trillion in tax revenue from the wealthiest Americans by raising the top rate for those earning more than $400,000 from 39.6% to 37% and imposing a tax on the 25% minimum income to billionaires.
The president’s plan – which he says will reduce the deficit by $3 trillion over 10 years – would also double the capital gains tax rate for investments to 39.6% from 20% and increase levies on companies.
Enough for the biggest peacetime budget in history was also proposed – including $842 billion for the Pentagon, a 5.2% pay rise for troops, $6 billion to support Ukraine and Europe and $37 billion for the nuclear weapons program.
The huge budget is likely to be stalled in Congress, and Republicans have already called the plan “reckless” and a “roadmap to fiscal ruin.”
It is asking for $688 billion in discretionary non-defence spending, that is, money for programs that aren’t mandatory like Social Security and Medicare. This is an increase of $47 billion over last year’s budget.
Discretionary programs – the only ones debated in Congress – are about $1.9 trillion, while mandatory programs are about $3.9 trillion and interest on the national debt is $796 billion. of dollars.
He will be dead when he arrives in Congress but will instead serve as a campaign model, showing Biden’s priorities as he seeks a second term.
This will set the stage for a clash of federal priorities with Republicans, who are demanding federal spending cuts to reduce the deficit.
To pay for his extensions to social programs and stabilization of Medicare — while reducing the deficit — Biden will pass a series of new taxes, including a Minimum tax of 25% on billionaires. This is more than the 20% he proposed last year.
White House Office of Management and Budget (OMB) Director Shalanda Young told reporters the budget would extend Medicare’s solvency for another 25 years.
The budget does not include a proposal to expand Social Security solvency, though it emphasizes opposing cuts to the program.
“I would love to be part of the debate where we can have a serious discussion about the proposals,” Young said. “But let’s not forget that the number one threat to Social Security … is those across the aisle who say they want to cut benefits.
Social security trust funds are expected to be depleted by 2034 if no reforms are made.
The president’s plan would also nearly double the capital gains tax rate for investments to 39.6% from 20% and increase levies on corporations and wealthy Americans.
On the other hand, Biden is offering extensions for nursery school, child care, paid family leave, elder care, housing, child tax credit and Medicaid.
It also proposes spending $9.1 billion specifically to target China’s influence and $5 billion in new electoral assistance funding to be spread over 10 years.
The budget calls for $25 billion to be spent on customs and border protection, an increase of $800 million from 2023. It provides for the hiring of 350 additional border guards and $40 million to fight against fentanyl trafficking.
It also includes $17.8 billion, up $1.2 billion from last year, for law enforcement.
Many of these proposals — both tax increases and the expansion of social programs — were in his original Build Back Better package that failed to pass Congress. Instead, Biden had to settle for the lite version, known as the Inflation Reduction Act.
They represent Democratic priorities but have no chance of passing the Republican-controlled House and it is unclear whether they could garner the necessary 60 votes in the Senate.
“I don’t think raising taxes is the answer,” President Kevin McCarthy said of Biden’s budget on Wednesday.
President Joe Biden, pictured en route to Philadelphia on Thursday, released a $6.58 trillion budget that includes sweeping new taxes on the wealthy
Biden’s proposal reverses several tax cuts put in place by former President Donald Trump: It raises the top tax rate for Americans earning $400,000 to 39.6% from 37% and would increase the rate of corporate tax at 28% versus 21%.
His budget also asks investors earning at least $1 million to pay that 39.6% on their long-term investments, which are currently taxed at a rate of 20%.
The budget includes provisions to reduce the cost of insulin to $35 a month for everyone and increase affordable housing vouchers for another 200,000 people.
He calls for a paid family and medical leave program, administered by the Social Security Administration, that would pay workers up to 12 weeks while they care for a sick family member or recover from an illness or of a traumatic incident. It would also offer three days of mourning after the death of a loved one.
The budget also includes billions to meet Biden’s goal of reducing US emissions by 50% by 2030 from 2005 levels in various departments and $23 billion for “climate resilience” – conservation and response to climate change. natural disasters.
It also proposes 3 billion dollars to help poor countries fight against global warming.
Republicans have yet to release their budget proposal, but it is expected to cut foreign aid and aid to the poor, including food, health care and housing.
Each party’s plan will serve as the starting point for negotiations between President Kevin McCarthy and Biden on fiscal year 2024 spending, which begin Sept. 1.
Much of what the federal government spends each year is mandatory spending set by federal law. This includes funding programs such as Social Security. Another part is made up of interest payments on the federal debt.
Both sides urgently need to agree on a budget as the nation hits a $31.4 trillion debt ceiling. McCarthy has insisted that the GOP-led House will not agree to increase the debt ceiling unless there are reductions in the fiscal year 2024 budget. President Biden will strongly opposed to debt limit negotiations.
The Treasury took “extraordinary measures” to move the money in January and give the nation until June to negotiate 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 to reach $10 trillion over the next 10 years. He revealed that combined spending on Social Security and Medicare would almost double by 2033, pushing $4 trillion and accounting for 10% of economic output.
House Republicans are expected to release their own budget in mid-April. They considered $150 billion in non-defense discretionary spending cuts to save $1.5 trillion over a decade and keep annual spending increases to 1%.
In a post on the CBO’s website this week, Swagel said Congress could “almost stabilize” debt growth by cutting deficits by an average of $500 billion a year for a $5 trillion economy. dollars over the next decade – far greater reductions than either party. considering.
Meanwhile, House Ways and Means Republicans are drafting a plan B if McCarthy and Biden maintain their standoff on the debt ceiling, bringing the nation one step closer to default.
The committee takes action on Thursday that would allow the Treasury to continue borrowing money to pay interest on the national debt if the two sides fail to reach a budget deal before funds run out – a sign that suggests they are not entirely convinced that the two parties will find an agreement.
Sen. Chuck Grassley, senior Republican on the Budget Committee, called the budget “reckless.”
“Pres Biden’s fiscal year 2024 budget proposal is a roadmap to fiscal ruin. From its delayed rollout to its reckless taxes and out-of-control spending, this budget sends a clear message: President Biden doesn’t seem to care about keeping his promises or ensuring our nation’s fiscal health,’ he said. he writes on Twitter.
The House GOP leadership called the budget “out of control.”
“President Biden is proposing runaway spending and delaying debt negotiations, following his tendency to shrug and ignore in the face of a crisis,” said Speaker Kevin McCarthy, Majority Leader Steve Scalise, the House Whip. Majority Tom Emmer and Republican Conference Speaker Elise Stefanik. A declaration.
“It’s 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.”
