President Biden on Monday proposed a $7.3 trillion budget packed with tax increases on corporations and high-income earners, new spending on social programs, and a wide range of efforts to combat high consumer costs. such as housing and university tuition.
The proposal includes only relatively small changes from the budget plan Biden unveiled last year, which went nowhere in Congress, though he reiterates his call for lawmakers to spend about $100 billion to strengthen border security. and deliver aid to Israel and Ukraine.
Most of the new spending and tax increases included in the fiscal 2025 budget again have almost no chance of becoming law this year, given that Republicans control the House and strongly oppose Biden’s tax agenda. Last week, House Republicans approved a budget proposal outlining his priorities, which are very far from what the Democrats have asked for.
Instead, the document will serve as a draft of Biden’s political platform as he seeks re-election in November, along with a series of contrasts intended to draw a distinction from his presumptive Republican opponent, former President Donald J. Trump.
Biden has tried to regain strength on economic issues with voters who have given him low marks amid rapid inflation. This budget aims to present you as an advocate for greater government aid for workers, parents, manufacturers, retirees and students, as well as the fight against climate change.
The president emphasized his plans for additional spending programs, including those he failed for years to convince Congress to enact, in his introduction to the budget.
“For many working families, it costs too much to find a good home, which is why we are working to reduce costs and increase the supply of housing across the country,” he wrote.
The budget, he added, “restores the expansion of the Child Tax Credit that I signed into law, which reduced child poverty nearly in half in 2021; and guarantees the vast majority of families high-quality child care for no more than $10 a day, while increasing the wages of child care workers. Provides free universal preschool for America’s four million 4-year-olds.”
Biden proposes more than offsetting those spending increases by imposing about $5 trillion in new taxes on corporations and the wealthy over a decade. Administration officials said Monday that those increases would be split evenly between corporations and the country’s highest earners, and that Americans earning less than $400,000 a year would enjoy tax cuts totaling $750 billion. dollars under budget.
“We can make all of our investments by asking those in the top 1 and 2 percent to put more into the system,” Shalanda Young, director of the White House Budget Office, told reporters.
The president has already begun trying to portray Trump as the opposite: a supporter of bigger tax cuts for corporations.
Polls show Americans are dissatisfied with Biden’s handling of the economy and favor Trump’s approach to economic issues. But Biden has been steadfast in his core economic policy strategy and the budget is not expected to deviate from that plan.
White House officials, anticipating the budget release, said Biden would propose about $3 trillion in new measures to reduce the budget deficit over the next decade. This is in line with his budget proposal last year, which reduced deficits by raising taxes on corporations and the wealthy and allowing the government to negotiate more aggressively with pharmaceutical companies to reduce spending on prescription drugs.
Biden is set to once again call for raising the corporate tax rate to 28 percent from 21 percent, the level Trump set in the tax bill he signed in late 2017. Biden will also propose raising a new minimum tax on large corporations and quadrupling a tax on stock buybacks, among other efforts to raise more revenue from companies and individuals earning more than $400,000 a year.
Those savings would build on discretionary spending limits that Biden and congressional Republicans agreed to last year to resolve a standoff over raising the nation’s debt limit. They would still leave the nation with historically high budget deficits — about $1.6 trillion a year on average over the next decade, according to the administration’s forecasts. As a percentage of the economy, deficits would decrease over that time, but total public debt as a percentage of the economy would increase.
House Republicans last week released a budget that seeks to reduce deficits much faster, balancing the budget by the end of the decade. Their savings depended on economic growth forecasts that are well above the expectations of traditional forecasters, along with steep and often unspecified spending cuts.
The nonpartisan Committee for a Responsible Federal Budget called the Republican plan “unrealistic in its assumptions and results.” On Monday, the group called Biden’s proposed deficit reduction “a welcome start, but too timid.”
Biden and his aides have repeatedly said they are comfortable that the projected deficits in their budgets will not hurt the economy. Young and Jared Bernstein, who heads the White House Council of Economic Advisers, repeated that position Monday, even after acknowledging that the budget now forecasts higher government borrowing costs over the next decade than previous budgets.
Instead of pivoting toward more aggressive deficit reduction, as previous Democratic presidents did after losing control of one chamber of Congress, Biden has leaned toward the need for new spending programs and targeted tax incentives to boost growth and middle class.
