President Joe Biden released his budget on Thursday, pledging to cut the federal deficit by $3 trillion over the next decade, in part by imposing a 25% minimum tax on the wealthiest Americans.
Biden’s budget would also generate more revenue by raising taxes on oil and gas companies, raising the corporate tax rate to 28% from the 21% levied under former President Donald Trump, but below the pre-2017 tax of 35% , and allow Medicare to negotiate drug prices.
With Biden likely running for re-election in 2024, his budget also previews his platform as a candidate and campaigning ground in the coming year. With a Republican-controlled House of Representatives, many of the proposals are unlikely to pass as they stand. The president presents his budget to Congress, outlining the government’s priorities for the coming year, but ultimately Congress decides where the funds will be allocated.
White House Director of Administration and Budget Shalanda Young told reporters the government is able to reduce deficit spending “by requiring the rich and big corporations to pay their fair share and wasteful spending.” for Big Pharma, Big Oil and other special interests.”
“It’s doing so in part by reforming our tax laws to reward work not wealth, including ensuring no billionaire pays a lower tax rate than a teacher or firefighter, and quadrupling the tax rate on corporate share buybacks,” Young said . “That’s a very clear contrast to the Republicans in Congress.”
Read more about Biden’s fiscal 2024 budget:
The stock buyback tax builds on a measure Biden signed into law last year to reduce the differential treatment in the code between buybacks and dividends. The goal is to encourage companies to invest in growth rather than investing in share buybacks. According to the budget proposal, the tax would quadruple from 1% to 4%. A February Data for Progress poll found that 58% of Americans support an increase in the stock buyback tax.
Biden’s fiscal 2024 budget is being helped by the slowing Covid-19 pandemic, which the White House said will require less emergency relief as the outbreak enters a new phase thanks to widespread vaccination. The president’s spending priorities include increasing funding for early childhood education and child care, extending the $35 cap on insulin prices to all Americans, and expanding free community college. These proposals are all part of his quest to give American families “a little more breathing room.” Fiscal year 2024 starts on October 1st and ends on September 30th, 2024.
Cecilia Rouse, chair of the Council of Economic Advisers, explained how the administration believes the social programs outlined in the White House budget will actually boost the economy.
“Policies like paid vacations and childcare will bring more workers into the labor market and increase productivity,” Rouse said. “Investments in early childhood education, mental health and community college not only expand the productive capacity of our economy, but also pay off for generations to come.”
In addition to social spending, the budget includes solid defense funding. At more than $835 billion, the defense budget would be among the largest peacetime spending in US history.
For weeks, the President has been asking House Republicans to come up with their own budget proposals instead of just criticizing his plan. House Republicans have vowed to propose a balanced budget and scoffed as the White House pointed to GOP proposals to cut programs like Social Security and Medicare. House Budget Committee Chairman Jodey Arrington told CNN on Wednesday that the Republican budget should be ready by the second week of May.
‘Fight it out’
In a speech Thursday in Philadelphia, Pennsylvania, Biden said he and House Speaker Kevin McCarthy, whom the president described as “a very conservative guy” with “a very conservative group” of lawmakers, reached an early agreement that to meet after both presented their budgets.
U.S. President Joe Biden delivers a remark on his fiscal 2024 budget at the Finishing Trades Institute on March 9, 2023 in Philadelphia, Pennsylvania.
Evelyn Hockstein Reuters
“We’re going to sit down and go through it line by line, and we’re going to go through it and see what we can agree on, what we disagree on, and then fight it out in Congress,” Biden told McCarthy. “I am willing to meet with the speaker anytime tomorrow if he has his budget. Set it down, show me what you want to do, I’ll show what I want to do. We can see what we can agree on, see what we disagree on, and we vote on that.”
The White House includes an entire section in its proposed budget devoted to supporting Social Security and Medicare, funded by the 25% minimum wealth tax for households with net worth of $100 million or more. The proposed budget would “extend the solvency of the Medicare Trust Fund by at least 25 years” without eliminating benefits or increasing costs. It also provides for a $1.4 billion increase in Social Security funding to improve services.
Debate on the debt ceiling
“Benefit cuts are not on the table,” Young said.
Above fiscal release, unresolved standoff looms over whether to remove debt ceiling. The White House has claimed it will not negotiate the debt limit, arguing that Congress should act to raise it, as it has done on numerous occasions over the past few decades. House Republicans, led by Speaker Kevin McCarthy, have sought to tie the debt ceiling to future spending, saying they will not back down without a promise to cut spending. However, the debt ceiling relates to existing spending. To date, House Republicans have not been sure which spending cuts they would like to see.
“MAGA Republicans in Congress have been trying to repeal the Affordable Care Act, Social Security, Medicare, Medicaid — we won’t let them,” Biden said. “My budget makes solid investments in military defense. Let’s see what MAGA Republicans propose, and make it clear where I stand: I will not allow cuts to intelligence or military needs that contribute to our security.”
‘Back to work’
Rouse touted the government’s economic track record, noting that under Biden’s watch, unemployment has somewhat inexplicably fallen — even as the pace of inflation has slowed. She said most economists could not have predicted the job market would rebound as strongly as it has seen since he took office.
“I think if you had told most conventional macroeconomists last June that we were going to get seven straight months of declining annual CPI inflation, they would have told us that the unemployment rate would rise during that period, but instead the unemployment rate was down in January at 3.4% or 0.2 percentage points lower than before,” said Rouse, noting that the unemployment rate for February will be released on Friday. “The economy also looks healthier today than usual.”
Rouse elaborated on this to allay recession worries by pointing to economic gains already being seen under government oversight.
“The strength of our recovery has put us on a solid footing to weather economic shocks,” Rouse said. “Americans are back to work and the economy is stronger than anyone, including the federal government and private forecasters, imagined when President Biden took office.”