President Biden unveiled a $5.8 trillion budget proposal on Monday, seeking more funds to fight crime, boost the military and combat climate change with new taxes on the wealthy and corporations to pay for it.
The budget, which would fund the government for the 2023 fiscal year, which begins Sept. 1, is a nod to centrist Democrats who have urged the White House to focus on issues important to voters as the midterm elections loom. He responded by pouring money into public safety, the Russia-Ukraine war and climate change.
“The budget I’m releasing today sends a clear message to the American people about what we value. First, fiscal responsibility. Second, safety and security, and thirdly, the investments needed to build a better America,” Mr. Biden said.
His budget proposal has virtually no chance of becoming law, as has been the case for every other budget in recent years. The partisan acrimony that defines Washington will prevent deal-making on a Biden budget, and the political environment will get more hostile as the midterm election campaigns heat up.
The budget, as always, is a vehicle to carry the president’s message to voters.
As part of the effort to connect with centrists, Mr. Biden pitched the budget as a formula for reducing the nation’s annual deficit by $1 trillion a year.
Overall, the Biden budget reflects a $1.3 trillion decline in federal spending over the current fiscal year, though much of the decrease is from expiring COVID-19 federal assistance programs.
Mr. Biden blamed former President Donald Trump for the country’s ballooning national debt, which now tops $30 trillion.
“We’re making real headway cleaning up the fiscal mess I inherited,” Mr. Biden said. “We’re returning our fiscal house to order.”
The White House credited the plan’s slew of tax hikes on the wealthy and corporations with keeping debt in check.
Mr. Biden’s biggest tax move is a “billionaire minimum income tax” that would impose a 20% minimum levy on all income, including gains from unsold assets, for Americans worth more than $100 million, or 0.01% of the population, according to the White House.
“A firefighter and a teacher pay more than double the tax rate that a billionaire pays,” said Mr. Biden. “That’s not right.”
Other tax plans include raising the top individual income tax rate to 39.6% from 37% and increasing the corporate tax rate to 28% from 21%.
The tax hikes are projected to raise more than $1.7 trillion over the next decade.
Critics said the U.S. would be at a competitive disadvantage with a 28% corporate tax rate, higher than that of many other countries, including China. The nonpartisan Tax Foundation estimated that 138,000 jobs would be lost over the next decade if the Biden corporate tax hike is adopted.
Republicans also warned that the new taxes would exacerbate the inflationary pressures wracking the economy. They accused Mr. Biden of paying “lip service” to deficit reduction while pushing for billions of dollars in new spending.
“President Biden’s budget is about as out of touch as it gets,” said Rep. Tim Walberg, Michigan Republican. “At a time when so many families are feeling the pain of sky-high inflation, the president’s proposal of trillions in higher taxes and new debt is a recipe for making the inflation crisis even worse.”
Mr. Biden’s budget looks to pull in more spending money by giving the Internal Revenue Service more funds to go after tax cheats. The tax-collecting agency would get an additional $2.2 billion, or an 18% raise, for a $14 billion budget.
The extra cash is supposed to help the IRS close the “tax gap,” the difference between taxes owed and taxes paid. The White House estimates that the stepped-up enforcement could rake in $700 billion to $1.3 trillion more in revenue for the federal government.
Congressional Democrats applauded the spending.
“The IRS lacks the resources it needs to crack down on corporations cheating our tax code, which leads to a $1 trillion gap between what’s owed and paid,” said Rep. Katie Porter, California Democrat.
Republican lawmakers say beefed-up IRS enforcement will wind up hassling working- and middle-class taxpayers. They argue that, unlike the wealthy, average Americans cannot afford to pay the legal fees required to dispute IRS audits.
“They want to finance their spending spree by effectively treating every ordinary American as if they were under IRS audit,” said Senate Minority Leader Mitch McConnell, Kentucky Republican. “I must have forgotten when the president campaigned on giving everybody their own audit.”
Mr. Biden did not offer price tags or a revenue assessment for some of his domestic proposals, including plans to reduce the cost of prescription drugs and subsidize child care.
Shalanda Young, director of the Office of Management and Budget, said the lack of numbers was “to leave a space” for congressional negotiators.
Republicans and conservative groups slammed the taxing-and-spending plan.
Sen. Lindsey Graham, South Carolina Republican, said it was full of “shell games and budget gimmicks” to obscure the true cost to taxpayers.
“The Biden Budget is not serious about deficit reduction,” Mr. Graham said. “Under the Biden plan, deficits continue climbing after 2023, culminating in a nearly $1.8 trillion deficit in the final year of the budget.”
Jenny Beth Martin of the conservative activist group Tea Party Patriots Action called the proposal “absurd.”
“We are already suffering under the worst inflation in 40 years because of the Democrats’ spending spree during his first year in office, and his response is to increase spending AND taxes? That’s absurd! Now he wants to pack the budget with fiscally irresponsible junk that will send inflation higher than Jimmy Carter levels,” she said.
Citing the Russia-Ukraine war, Mr. Biden proposed increasing defense spending by more than $800 billion per year. He requested $813.3 billion in national security spending, an increase of $31 billion, or 4%.
He put $32 billion toward fighting crime in a bid to distance Democrats from the far left and the defund-the-police movement. The funding included $20.6 billion for the Justice Department to spend on federal law enforcement, crime prevention and intervention. It’s a $2 billion increase from the $18.6 billion currently allocated for those efforts.
For the first time, the White House proposed providing Veterans Affairs with its own funding stream. The plan is to infuse the VA’s budget with $119 billion, a historic 32% increase. That money will fund training programs for clinicians and preparedness for national emergencies.
Much of the $18 billion Mr. Biden dedicated to combating climate change is a retooling of the climate proposals in his stalled $1.75 trillion spending program, known as Build Back Better. The budget includes funding for wind and solar projects to help reduce carbon emissions by 2030.
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