President Joe Biden released a $6.8 trillion budget Thursday that includes sweeping new taxes for the wealthy, targeted corporations and expansions for social programs like pre-kindergarten, child care and paid family leave.
The budget calls for a whopping $5.5 trillion in new tax revenue over the next decade and is projected to reduce the deficit by $3 trillion over 10 years.
The budget proposes a 7.3 percent increase in discretionary non-defense spending, roughly double its increase in defense spending. It calls for $842 billion to be allocated to the Pentagon budget, up from $816 billion in 2023. That includes a 5.2 percent pay increase for troops.
It calls for $886 billion in total to be spent on ‘national defence’, including $6 billion to support Ukraine and Europe. It also calls for $37 billion to modernize nuclear capabilities.
It requires $688 billion in discretionary non-defense spending, which means money for non-mandatory programs like Social Security and Medicare. That’s a $47 billion increase over last year’s budget.
President Joe Biden released a $6.58 trillion budget Thursday that includes new taxes on the wealthy
Discretionary programs, the only ones being debated in Congress, represent about $1.9 trillion, while mandatory programs represent about $3.9 trillion and interest on the national debt represents $796 billion.
He will be dead by the time he reaches Congress, but will instead serve as a campaign model, showcasing Biden’s priorities as he seeks a second term in office.
It will set the stage for a clash of federal priorities with the Republicans, who are demanding cuts in federal spending to reduce the deficit.
To pay for his expansions to entitlement programs and stabilization of Medicare, all while reducing the deficit, Biden will enact a series of new taxes, including a Minimum 25 percent tax on billionaires. That’s higher than the 20 percent he proposed last year.
The director of the White House Office of Management and Budget (OMB), Shalanda Young, told reporters that 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 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 projected to run out by 2034 if reforms are not made.
The president’s plan would also nearly double the capital gains tax rate for investment from 20% to 39.6% and increase income taxes on corporations and wealthy Americans.
On the other hand, Biden proposes expansions for pre-kindergarten, 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 election assistance funds 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 hiring an additional 350 border guards and $40 million to combat fentanyl trafficking.
It also includes $17.8 billion, $1.2 billion more than last year, for law enforcement.
Many of these proposals, both tax increases and expansions of social programs, were in his original Build Back Better package that failed to pass Congress. Instead, Biden had to settle for the shortened version, known as the Inflation Reduction Act.
They represent Democratic priorities but have no chance of making it to the Republican-controlled House of Representatives and it is unclear if they could get the necessary 60 votes in the Senate.
“I don’t think raising taxes is the answer,” President Kevin McCarthy said Wednesday of Biden’s budget.
Biden’s proposal reverses several tax cuts implemented by former President Donald Trump: It increases the top tax rate for Americans earning $400,000 to 39.6% from 37% and would increase the corporate tax rate to 28% from 21%.
His budget also requires investors who earn at least $1 million to pay that 39.6% on their long-term investments, which are currently taxed at a 20% 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 requires a paid family and medical leave program, administered by the Social Security Administration, that would pay workers for up to 12 weeks while they care for a sick family member or heal from an illness or traumatic incident. It would also offer three days of mourning after the death of a loved one.
The budget also includes billions to carry out Biden’s goal of cutting US emissions by 50 percent by 2030 compared to 2005 levels across different departments and $23 billion for ‘climate resilience’. ‘: conservation and response to natural disasters.
He also proposes $3 billion to help poor countries fight global warming.
Republicans have yet to publish their budget proposal, but it is expected to slash foreign aid and assistance to the poor, including food, health care and housing.
Each party’s plan will serve as the kickoff for negotiations between President Kevin McCarthy and Biden on spending for the 2024 fiscal year, which begins Sept. 1.
Much of what the federal government spends each year is mandatory spending set by federal law. That includes funding for programs like Social Security. Another portion is made up of interest payments on the federal debt.
The two sides urgently need to agree on a budget as the nation faces a debt ceiling of $31.4 trillion. McCarthy has insisted that the GOP-led House will not agree to raise the debt limit unless there are cuts to the fiscal year 2024 budget. President Biden has been adamant against trading the debt limit.
The Treasury took “extraordinary measures” to move money in January and gave 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 that 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 nearly double by 2033, reaching $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 considering $150 billion in non-defense discretionary spending cuts to save $1.5 trillion over a decade and keep annual spending increases at 1%.
In a post on the CBO website this week, Swagel said Congress could “almost stabilize” debt growth by cutting deficits by an average of $500 billion a year for savings of $5 trillion over the next decade, much steeper cuts than either party. considering.
Meanwhile, House Ways and Means Republicans are drafting a plan B if McCarthy and Biden maintain their impasse over the debt ceiling, moving the nation closer to default.
On Thursday, the committee is adopting a measure that would allow the Treasury to continue borrowing money to pay interest on the national debt if the two sides cannot reach a budget agreement before the funds run out, a sign that suggests they are not they are completely sure that the two sides will find an agreement.
