President Joe Biden on Thursday released a $6.8 trillion budget that imposes higher taxes on the wealthy, targets businesses and provides a huge cash injection for social programs such as child care and paid family leave.
The plan includes bringing in $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 percent to 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 on investments from 20 percent to 39.6 percent and raise corporate income taxes.
Enough for the largest peacetime budget in history has also been proposed – including $842 billion for the Pentagon, a 5.2 percent wage increase for troops, $6 billion for aid to Ukraine and Europe, and $37 billion for the nuclear weapons program.
Billions have also been earmarked for a 5.2 percent pay increase for federal employees, aid for refugees, more offshore wind farms and a $25 billion investment in border security.
The massive budget is likely to be blocked in Congress, and Republicans have already called the plan “reckless” and a “roadmap to fiscal ruin.”
It calls for $688 billion in non-defense discretionary spending — that is, money for programs that are not mandatory, such as Social Security and Medicare. That’s an increase of $47 billion over last year’s budget.
Discretionary programs — the only ones under discussion in Congress — account for 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 upon arrival in Congress, instead serving as a campaign template, showing Biden’s priorities as he seeks a second term.
WHAT ELSE IS IN BIDEN’S BUDGET
- $6 billion in aid to Ukraine and Europe
- $37.7 billion for nuclear weapons
- $17.8 billion for violent crime
- 5.2 percent pay increase for troops
- $40 million to fight fentanyl trafficking
- $26 billion to strengthen the border – an increase of $800 million from 2023
- $535 million for technology at border crossings
- Funds to hire 350 additional border agents
- $3 billion to help poor countries deal with global warming
- Funding for 100,000 police officers nationwide
It will pave the way for a clash of federal priorities with Republicans demanding federal spending cuts to reduce the deficit.
To pay for his social program expansions and Medicare stabilization — while reducing the deficit — Biden will introduce a series of new taxes, including a 25 percent minimum tax for billionaires. That’s higher than the 20 percent he proposed last year.
White House director, Office of Management and Budget (OMB), Shalanda Young, told reporters that the budget would extend Medicare’s solvency for another 25 years.
The budget does not include a proposal to extend Social Security solvency, even as it highlights opposition to program cuts.
“I’d love to be part of the debate where we can seriously discuss proposals,” Young said. “But let’s not forget that the biggest threat to Social Security… is those across the aisle saying they want to cut benefits.
Social Security trust funds are expected to be exhausted by 2034 if reforms are not implemented.
The president’s plan would also nearly double the capital gains tax rate on investments from 20 percent to 39.6 percent and raise income taxes for businesses and wealthy Americans.
On the other hand, Biden proposes expansions kindergarten, day care, paid family leave, elder care, housing, the Child Tax Credit, and the Medicaid.
He also proposes spending $9.1 billion specifically to address China’s 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 increase of $800 million from 2023. It calls for the hiring of 350 additional 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 Congress was unable to pass. 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 is unclear if they can muster the 60 votes needed in the Senate.
“I don’t believe raising taxes is the solution,” Chairman Kevin McCarthy said of Biden’s budget on Wednesday.
President Joe Biden, pictured Thursday heading to Philadelphia, has released a $6.58 trillion budget, including sweeping new taxes on the wealthy
Biden’s proposal reverses several tax cuts introduced by former President Donald Trump: It raises the top tax rate for Americans earning $400,000 from 37 percent to 39.6 percent and would raise the corporate tax rate from 21 percent to 28 percent.
His budget also calls for investors earning at least $1 million to pay that 39.6 percent on their long-term investments, which are currently taxed at a rate of 20 percent.
The budget includes provisions to reduce the cost of insulin to $35 a month for everyone and increase affordable housing vouchers for an additional 200,000 people.
It calls for a paid family and sick leave program, administered by the Social Security Administration, that would pay workers for up to 12 weeks while they care for a sick relative or heal from an illness or traumatic incident. It would also provide three days of grieving after the death of a loved one.
New taxes in Biden’s budget
- Top tax rate increased from 37 to 39.6 percent
- 24 percent minimum tax for billionaires
- The capital gains tax rate nearly doubled from 20 percent to 39.6 percent
- Raise the federal corporate 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 the share buyback tax to 4 percent
- Close the carried interest loophole for private fund managers
The budget also includes billions to implement Biden’s goal of reducing U.S. emissions by 50 percent by 2030 compared to 2005 levels in several departments and $23 billion for “climate resilience” — conservation and natural disaster mitigation.
It also proposes $3 billion to help poor countries fight global warming.
Republicans have not yet released their budget proposal, but it is expected to cut foreign aid and reduce aid to the poor, including food, health care and housing.
Each side’s plan will serve as the launching pad for negotiations between Chairman Kevin McCarthy and Biden on fiscal 2024 spending, which begin Sept. 1.
Much of what the federal government spends each year is mandatory spending established by federal law. That includes funding for programs like Social Security. Another part consists of interest payments on the federal debt.
The two sides urgently need to agree on a budget as the country hits a $31.4 trillion debt ceiling. McCarthy has insisted that the GOP-led House will not agree to raise the debt limit unless the FY 2024 budget is cut. President Biden has strongly opposed debt limit negotiations.
The Treasury took “extraordinary measures” to move money in January, giving the country until June to negotiate a debt limit increase before the country could default.
In its annual budget outlook last month, the nonpartisan Congressional Budget Office (CBO) predicted that interest payments on the national debt would reach $10 trillion over the next 10 years. It found that combined Social Security and Medicare spending would nearly double by 2033, amounting to $4 trillion and accounting for 10 percent of economic output.
House Republicans are expected to release their own budget in mid-April. They have been eyeing $150 billion in discretionary cuts in non-defense spending to save $1.5 trillion over a decade and maintain annual spending increases of up to 1 percent.
In a post on the CBO’s website this week, Swagel said Congress could “almost stabilize” debt growth by reducing deficits by an average of $500 billion a year for savings of $5 trillion over the next decade – much sharper cuts than any party. considering.
Meanwhile, House Ways and Means Republicans are drafting a plan B if McCarthy and Biden maintain their deadlock over the debt ceiling, pushing the country closer to bankruptcy.
The commission is passing a measure on Thursday that would allow the Treasury to continue borrowing money to pay interest on the national debt if both sides can’t come to a budget agreement before funds run out — a sign that suggests they’re not entirely sure. the two sides will find an agreement.
Senator Chuck Grassley, a top Republican on the Budget Committee, called the budget “reckless.”
Pres Biden’s FY2024 budget proposal is a roadmap to fiscal ruin. From the delayed implementation to the reckless taxes and out-of-control spending, this budget sends a clear message: Pres Biden doesn’t seem to care about delivering on his promises or safeguarding our nation’s fiscal health,” he wrote. 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 our grandchildren are saddled with the bill,” he said.
The House GOP leadership called the budget “out of control.”
“President Biden is proposing out-of-control spending and delaying debt negotiations, echoing his pattern of shrugging and ignoring when faced with a crisis,” said Speaker Kevin McCarthy, Majority Leader Steve Scalise, Majority Leader Whip Tom Emmer and Republican Conference Chair Elise Stefanik in a statement.
“This is a spending problem, not a revenue problem,” they said. “President Biden’s unserious budget proposal includes trillions of new taxes that families will pay directly or through higher costs.”