Biden unveils $6.9 trillion budget plan: 7 key takeaways
President Joe Biden unveiled a $6.9 trillion budget proposal on Thursday, a defiant opening salvo in high-stakes talks with congressional Republicans over the debt ceiling and government funding.
The proposal, which was rejected by the Republican-controlled House of Representatives, showed little inclination to compromise, asking lawmakers to bolster the social safety net through a flurry of new taxes on the wealthy and corporations.
Biden unveiled his proposal at a workforce training facility in Philadelphia where he challenged Republican House Speaker Kevin McCarthy to detail his plan.
“I want to be clear, I’m ready to meet with the president any time — tomorrow if he has his budget, keep it,” Biden said.
The president’s proposal would increase funding for many government programs, expand Medicare’s solvency, lower drug prices and reduce the deficit by $3 trillion over the next decade. Still, the deficit will increase from $1.6 trillion to $1.8 trillion in 2024, and the gross federal debt will rise to $51 trillion a decade later.
In a year GOP leaders have said they would cut spending by at least $150 billion and ruled out tax increases, Biden has increased defense and non-defense spending by $5.5 trillion in taxes over the next decade. Proposed to add 77 billion.
The gulf between the parties underscored the fact that presidential budgets are wish lists dead on arrival with few practical implications. But this year’s edition – cast against a backdrop of looming legislative battles that could roil markets and devastate the country’s fragile post-pandemic recovery – has been hailed by the White House as a marker of the battles to come. It is very important.
“I guarantee you that I will protect Social Security and Medicare without any change,” Biden said on Thursday. “I will not let this end or end as some mega Republican threatened to do so.”
“My budget will not cut benefits, and it certainly will not eliminate programs,” he continued.
The White House is eager to contrast the president’s approach with congressional Republicans, whose own proposal to be unveiled this spring is expected to include steep cuts to federal programs including health care subsidies and benefits for the poor.
But the approach is a gamble for the president. Federal Reserve Chairman Jerome Powell warned lawmakers on Wednesday that they could face “extraordinarily adverse” consequences if they fail to raise the $31.4 trillion debt ceiling this summer.
Critics are sure to seize on Biden’s decision to recycle policy programs – and claims of deficit savings through tax hikes – that failed to win over even some Democrats during the past two years. And by offering few avenues for good-faith negotiations, Biden risks a government shutdown when funds run out on October 1.
Here are some key takeaways:
At the center of what the White House is pitching as a $3 trillion cut plan is a raft of tax hikes.
Biden proposes nearly doubling the capital gains rate for those making at least $1 million, a 25% minimum tax on billionaires, and creating a new top income tax bracket at 39.6% for those making more than $400,000. The president wants to raise the corporate tax rate from 21% to 28%, eliminate Medicare and retirement tax loopholes used by the wealthy, and eliminate breaks for real estate investors and the oil and gas industries Want to
Tax plans have little chance of happening. Biden had to return a scaled-down version of the proposal last year to win the support of Democratic senators for his climate and inflation legislation.
Biden’s budget is heavy on proposals the White House believes enjoy broad bipartisan support, and could serve as a springboard for his upcoming bid.
Leading the charge are a series of proposed changes to how the government can negotiate and cap the cost of prescription drugs, which the administration estimates could save more than $200 billion over the next decade Is. Biden’s proposal would cap insulin prescriptions at $35 per month for all Americans, and cap the cost of some generic drugs, such as those to treat high blood pressure and high cholesterol, at $2 per prescription per month.
Biden also calls for federal funding for free preschool for the nation’s 4-year-olds, as well as a 10.5% increase for existing early care programs and a 9% increase for Head Start. Biden also wants to boost federal programs with bipartisan appeal, seeking billions for cancer research and funding to hire 350 more Border Patrol agents.
The budget calls for a 66% increase in police recruiting grants, underlining Biden’s stance that he opposes funding the police.
Read also: Biden gives a strong performance
The Biden administration is expecting inflation to continue its recessionary path to end 2023 at 6.4% from the current annual rate of 4.3%. The projection is largely in line with the median forecast of economists compiled by Bloomberg, a stark change from last year’s release, when the White House came under scrutiny for publishing outdated economic projections.
Biden’s economic team also sees the US economy expanding by 0.6% in real terms in 2023, in line with projections from both Wall Street economists and the Federal Reserve. The administration, which has capitalized on the strength of the labor market in an effort to show a thriving economy, sees the unemployment rate rising by 2023 from 4.3% to more than a five-decade low of 3.4%.
While this iteration lacks some of the sweeping new programs Biden proposed in his first budget, the White House proposes increasing funding for programs it says will help Americans handle rising costs in an era of inflation. will gain help in. The request includes $59 billion for affordable housing, and proposes expanding Pell grants by $500 for low-income college students. Biden will boost funding for free school lunches, home energy and water assistance and health care subsidies.
Biden also asks Congress to renew an expanded child tax credit, which expired last year, up to $3,600 per child, earning praise from progressive lawmakers.
Medicare and Social Security
Biden’s budget envisages extending a flagship Medicare program for another quarter century, by raising taxes on those earning more than $400,000 a year. Republicans have vowed not to touch the program, but Biden has sought to highlight past GOP efforts to overhaul eligibility programs by reducing qualifications or benefits.
Interestingly, Biden opposed a proposal introduced by some Democratic lawmakers that would impose a Social Security payroll tax on wealthy Americans. Currently, income over $160,200 is not taxed for the program. Budget director Shalanda Young said the decision was intended to signal that replacing the program was “not on the table.”
House Speaker Kevin McCarthy told reporters that the House budget plan would be delayed because Biden’s budget was a month late and Republicans needed to analyze it. But on Wednesday he outright rejected Biden’s proposed tax hike.
“I do not believe that raising taxes is the answer,” he said.
Republicans are seeking to balance the budget within ten years, a feat that would require $20 trillion in spending cuts if taxes were not increased. McCarthy has said he will not support cuts to Medicare and Social Security. This means the cuts will focus on the domestic discretionary budget which includes everything from cancer research to Head Start. It would also seek savings by cutting Medicaid, food stamps and other anti-poverty programs.
Read also: How dare you…’: Biden criticizes Republicans for downplaying January 6 Capitol attack
The White House’s proposed $842 billion Pentagon-only request, excluding the cost of the wars in Iraq and Afghanistan, is the largest defense budget in the post-Vietnam era, 3.2% more than the $816 billion Congress appropriated this year.
The Pentagon’s request includes $170 billion in procurement spending and $145 billion for research and development as the US seeks to regain the technological edge that lawmakers and experts have regretted losing to China over its ambitious defense build-up. Has gone.
The White House said it wants to speed up the development of “uncrewed combat aircraft” – drones that serve as wingmen for piloted planes. Air Force Secretary Frank Kendall revealed this week that the service will request funding to buy 1,000 of the craft.
“It also invests in key technologies and sectors of the US industrial base, such as microelectronics, submarine manufacturing, munitions production and bio-manufacturing,” the release said.
The administration’s overall national security request – which includes the Department of Energy and other agencies – totals $886 billion.