Biden’s proposal will meet stiff resistance in Congress and has “little to no chance” of becoming law, experts say.
US President Joe Biden’s upcoming federal budget plan is full of spending proposals and higher taxes on the wealthy, providing a blueprint for his expected re-election in 2024.
Biden’s proposal, which he will present Thursday afternoon in the swing state of Pennsylvania, will meet stiff opposition in Congress this year after Republicans won control of the House of Representatives in November’s midterm elections and large swathes are unlikely to win. will ever be adopted. .
The plan, however, was a political statement that went directly against Republican House Speaker Kevin McCarthy’s threat to block an increase in the $31.4 trillion cap on federal loans unless Biden agreed to cut federal spending. to keep in check.
The Democratic president will highlight plans to reduce, but not eliminate, the country’s deficit by nearly $3 trillion over 10 years, a commitment he made in his State of the Union address. He will aim to do that by increasing taxes on those earning more than $400,000 a year and ending a number of corporate tax breaks introduced in 2017 under then-President Donald Trump.
“The president’s budget provides a roadmap to build on that progress and get the job done,” said Shalanda Young, director of the White House Office of Management and Budget.
Biden proposed to fund higher spending and close the deficit by imposing a 25 percent minimum tax on billionaires and doubling the capital gains tax from 20 percent, the White House said.
Here are some of the highlights of the upcoming budget:
- Biden will pledge to save nearly $3 trillion over 10 years, with tax hikes for corporations and high earners.
- The budget calls for raising the Medicare tax on income above $400,000 from 3.8 percent to 5 percent, and expanding the federal government’s ability to negotiate drug prices to keep the health care program solvent.
- It proposes quadrupling the 1 percent tax on stock buybacks, which took effect in January, to encourage companies to invest in their growth rather than incentivize shareholders.
- Biden is calling for a 25 percent minimum tax on households worth more than $100 million. The White House calls it the “minimum income tax for billionaires.”
- The budget includes a proposal to raise the corporate tax rate to 28 percent, higher than the current level but still below the 35 percent tax rate that was in effect before the 2017 tax cuts by his predecessor Donald Trump.
- The budget reintroduces a provision to extend the child tax credit to families with lower incomes. Twenty-two states have already initiated similar provisions. It also aims to reduce childcare costs and provide free preschool for all four-year-olds in the country. White House officials say cutting childcare costs will boost the economy and allow more women to return to work.
- The budget also proposes to cut tens of billions of dollars in tax breaks currently enjoyed by oil and gas companies, real estate investors, fund managers, high net worth retirement savers and cryptocurrency traders.
‘little to no shot’
Former Vice President Mike Pence, a Republican who is considering running in the 2024 presidential election, called the budget plans “a mishmash of nonsense games, budget tricks and massive tax hikes that will hurt economic growth while increasing Medicare insolvency by a few more.” delays will delay.” year”.
He said Biden could pull hundreds of billions of dollars out of the deficit by repealing some of his policies, including a student loan forgiveness plan.
“The budget reflects the president’s ironclad belief that we need a tax system that rewards work, not wealth — and ensures that the wealthiest Americans and largest corporations do not pay lower tax rates than teachers or firefighters,” the White House said in a statement. declaration. .
John Gimigliano, a senior tax advisor at the accounting firm KPMG, said that while Biden’s proposals had “little to no chance” of becoming law, they served an important political purpose.
“While the tax proposals that will be put forward by the administration later today are unlikely to receive much attention in a divided Congress, it is the president’s job to strengthen and enhance the current administration’s vision of the tax system for the American people. to keep.” these ideas are alive in their minds as we head into the 2024 election,” he said in a statement.
Republicans have said Biden’s spending during his first two years in office drove inflation to nearly 40-year highs last year. The Federal Reserve estimated that COVID-related federal spending under Trump and Biden contributed 2.5 percentage points to US inflation in 2020 and 2021.
Republicans are already preparing $150 billion in cuts to non-defense programs, including about $25 billion from the Department of Education, foreign aid cuts, and programs aimed at preventing sexually transmitted diseases. They have said this would save $1.5 trillion over a decade.
Is there a common ground? “Very little, very little,” Republican Representative Ben Cline told Reuters. “He doesn’t want to cut spending, he just wants to raise taxes.”