President Biden on Thursday unveiled a 2024 budget proposal that revived his calls for massive new social spending and tax hikes on the rich, foreshadowing his presidential campaign and challenging Republicans ahead of a looming fiscal showdown.
The president’s budget calls for paring back the deficit over the next decade while also spending more than $2 trillion on dozens of new domestic policy initiatives, paid for by more than $4.5 trillion in new revenue, primarily through hefty tax hikes on high earners and large corporations and by reining in federal spending on prescription drugs. The blueprint envisions a much more expansive role for the federal government overall, aiming for about $10 trillion in annual spending by 2033 – up from roughly $6.3 trillion currently, and about $6.9 trillion in the next fiscal year.
The budget is highly unlikely to pass through a Republican-controlled House, as GOP lawmakers already declared it a non-starter. The 182-page document also reveals the numerous challenges the administration faces in crafting federal economic policy that aligns with its political objectives – projecting an increase in the deficit for next year, relatively sluggish economic growth and a federal debt that even the administration says will eclipse $40 trillion a decade from now.
Speaking in Philadelphia, Biden highlighted his budget’s proposed investments in education, health care, and other social programs, while assailing the GOP over the Trump tax cuts and emphasizing the progress made by the administration so far.
“My budget is going to give working people a fighting chance. It’s going to create good-paying jobs. And we can pay for these jobs while reducing the deficit,” Biden said. “We also have to ask the wealthiest and biggest corporations to begin to pay their fair share, and cutting subsidies for special interests.”
Biden stressed that the plan draws a sharp contrast in spending battles with GOP lawmakers, who hope to use the nation’s borrowing limit – which must be raised sometime this summer to avoid a potentially catastrophic default on U.S. debt payments – to secure cuts to many of the kinds of programs Biden is trying to boost. As Republicans ramp up their demands for extending President Donald Trump’s 2017 tax cuts while cutting spending, Biden’s budget shows the president moving in a starkly different direction.
“Congressional Republicans keep saying they want to reduce the deficit. But they have not put out a comprehensive plan showing what they’ll cut,” White House Office of Management and Budget Director Shalanda Young told reporters earlier Thursday. “Will it be Medicare? Social Security? The Affordable Care Act? Veterans’ benefits? We don’t know until they put out a plan. We’re looking forward to seeing their budget so the American people can compare it to what we’re putting out today.”
House Republican leaders condemned the Biden plan as “reckless” and argued that the nation faces a crisis driven by higher levels of government spending, not inadequate tax collection.
“This is a spending problem, not a revenue problem,” said the statement, signed by Speaker Kevin McCarthy (Calif.), Majority Leader Steve Scalise (La.), Majority Whip Tom Emmer (Minn.) and GOP Conference Chairwoman Elise Stefanik (N.Y.). “Yet President Biden’s unserious budget proposal includes trillions in new taxes that families will pay directly or through higher costs.”
Biden’s budget calls for reducing the deficit by $2.9 trillion over the next 10 years, achieved almost entirely through unprecedented tax hikes on affluent investors, billionaires, companies’ stock buybacks, those earning more than $400,000 per year and large corporations. The plan would partially reverse the 2017 Trump tax cuts, raising the corporate tax rate from 21 percent to 28 percent. It also would raise the minimum tax paid by billionaires to 25 percent, restore the top marginal tax rate to 39.6 percent for those earning more than $400,000 per year and raise the capital gains tax rate to 39.6 percent for those earning more than $1 million.
The budget would revive many of the spending plans Biden released at the outset of his administration, which had to be scaled back last year amid opposition from Sen. Joe Manchin III (D-W.Va.) – reflecting the administration’s ongoing commitment to transforming broad sections of the U.S. economy with bold new social programs.
The White House budget calls for more than $1 trillion in new spending on programs such as Medicaid, child care, prekindergarten, public housing and free community college. It includes an additional $1 trillion in tax credits and breaks aimed at lower- and middle-class Americans, such as reviving the expanded child tax credit that was only approved for one year as part of Biden’s 2021 American Rescue Plan. The expiration of that policy – once viewed as a potential key part of Biden’s legacy – led to a spike in child poverty, though Manchin and Republicans argued the higher credits exacerbated inflation.
The document suggests Biden’s initial ambitions to pass a generational expansion of government – similar to that of President Franklin D. Roosevelt’s New Deal or President Lyndon B. Johnson’s Great Society – could return as a key rallying cry for the Democratic Party in 2024.
“It’s important President Biden use the budget as an opportunity to lay out a blueprint for an alternative, hopeful, forward-looking vision of how government can improve people’s lives,” said Karthik Ganapathy, a political strategist at Left Flank, a political and communications strategy firm for Democrats who praised the work Biden had done so far. “That’s not just a good governing strategy – it’s also smart politics that will galvanize all parts of the Democratic Party’s coalition going into 2024.”
The fate of Biden’s budget rests in the hands of a divided Congress, where Republicans who assumed control of the House in January pledged to reel in federal spending. GOP leaders have threatened to withhold their votes to raise the debt ceiling, the legal limit on how much the United States can borrow to pay its bills. Without action, the government could face an unprecedented default, a fiscal catastrophe that could send shock waves throughout the global economy.
Those stakes loomed as Republicans convened a hearing Thursday to consider a bill that would set up an elaborate system to prioritize some federal payments – including interest on U.S. debt – over others.
Rep. Jason T. Smith (R-Mo.), the chairman of the tax-focused House Ways and Means Committee, struck a defiant tone, accusing the Biden administration of “brinkmanship” in refusing to discuss fiscal reforms and blasting Democrats’ recent spending packages. Republicans were also quick to pan the proposed tax hikes, which they maintain depress economic growth and make the U.S. economy less dynamic.
“The president always harps on people who don’t pay their fair share. But he’s suggesting those who pay the most in taxes need to pay even more,” said Rep. Adrian Smith (R-Neb.), a member of the Ways and Means Committee. “I don’t see that as ultimately being good for our economy or economic growth moving forward.”
The budget reflects other top priorities of the Biden administration, as well as some of the difficult economic challenges the White House faces in the next two years.
It shows the budget deficit rising from $1.3 trillion in 2022 to $1.6 trillion in 2023 and then to $1.8 trillion in 2024, before eventually declining gradually. Biden frequently takes credit for the deficit declining between 2021 and 2022, although the expiration of his $1.9 trillion economic stimulus plan was largely the reason. An increase in the deficit this year and the next would sharply undercut the president’s promises.
Asked about the projected increase, Young, the budget director, blamed Trump. “The president inherited historically high deficits from the previous administration,” she said.
The budget also shows inflation remaining elevated at 4.3 percent this year – a significant drop from the year before, but still substantially higher than the Federal Reserve’s 2 percent target for annual price growth.
And despite meteoric economic growth in 2021, the budget projects a cooling for much of the rest of the decade, in the range of 2 percent. The White House only projects economic growth of 0.6 percent this year.
Biden also requested $886 billion in defense spending for 2024, although the budget has the growth in military spending leveling off the rest of the decade.
The budget shows other key challenges for Biden. The administration included a plan to address the looming shortfall facing Medicare, the health insurance program for the elderly, funded by taxes on high earners and a reduction in drug costs. But despite pressure from Sen. Bernie Sanders (I-Vt.), the White House released no such plan for resolving the funding crisis facing Social Security, which will face automatic cuts to seniors’ benefits in about a decade without action.
Asked about the lack of a plan on Social Security, Young said Republicans were to blame for trying to cut the program. “The number one threat to Social Security and benefits for folks like my 94-year-old grandmother is those on the other side of the aisle who say they want to cut benefits,” Young said. The White House said its Medicare plan would keep that program solvent for at least another 25 years.
The budget also attempts to head off GOP complaints that the White House is insufficiently concerned about wasteful spending. The budget requests more than $1 billion for prosecuting – and preventing – fraud in pandemic aid programs, especially in unemployment insurance, while also eliminating tax subsidies for oil and gas firms, rescinding unused spending for federal prisons, and closing various tax loopholes that the administration said benefit real estate firms, cryptocurrency transactions and wealthy investment managers.
(c) 2023, The Washington Post · Jeff Stein, Tony Romm
Source: Matzav
