President Joe Biden unveiled a $6.9 trillion budget proposal on Thursday, a defiant opening salvo in high-stakes negotiations with congressional Republicans over the debt ceiling and government funding.
The proposal, certain to be rejected by the Republican-controlled House of Representatives, showed little inclination for compromise, asking lawmakers to bolster the social safety net through a flurry of new taxes on the wealthy and corporations.
Biden's proposal would increase funding on a bevy of government programs, extending the solvency of Medicare, lowering prescription drug prices, and cutting the deficit by $3 trillion over the next decade. Even still, the deficit in 2024 would increase from $1.6 trillion to $1.8 trillion, and the gross federal debt would swell to $51 trillion after a decade.
In a year that GOP leaders have said they would pursue at least $150 billion in spending cuts and refuse tax increases, Biden instead proposes adding $77 billion across defense and non-defense spending while increasing taxes by $5.5 trillion over the next decade.
The gulf between the parties underscored the truism that presidential budgets are dead-on-arrival wish lists with few practical implications. But this year's edition – cast against the backdrop of coming legislative battles that could rattle markets and devastate the nation's fragile post-pandemic recovery – carried outsized importance as a marker of how the White House would approach the coming battles.
White House aides were eager to contrast the president's vision with congressional Republicans, whose own proposal, to be unveiled this spring, is expected to include deep 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 on Wednesday warned lawmakers of the risk of "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 claim deficit savings through tax hikes – that failed to win over even some Democrats during the previous two years. And by offering few pathways for good-faith negotiation, Biden heightens the risk of a government shutdown when funding runs out on Oct. 1.
Here are some key takeaways:
Taxes
A bevy of tax increases are at the heart of what the White House is pitching as a $3 trillion reduction plan.
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 over $400,000.
The president also wants to hike the corporate tax rate from 21% to 28%, end Medicare and retirement tax loopholes used by the wealthy, and eliminate breaks for real estate investors and oil and gas industries.
The tax plans have little chance of passing. Biden had to pare back a scaled-down version of the proposal to win the support of Democratic senators for his climate and inflation legislation last year.
2024
Biden's budget is heavy on proposals the White House believes enjoy wide bipartisan support, and that can serve as a platform for his coming reelection bid.
Leading the charge are a slew of proposed changes to how the government could negotiate and limit the price of prescription drugs, which the administration estimates could save more than $200 billion over the next decade.
Biden's proposal would cap insulin prescriptions at $35 per month for all Americans, and cap the cost of certain generic drugs, like those used to treat hypertension and high cholesterol, to $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% bump for Head Start. Biden also seeks to boost federal programs with bipartisan appeal, asking for billions more for cancer research and funding to hire 350 more border patrol agents.
Underscoring Biden's stance opposing defunding the police, the budget calls for a 66% increase in police hiring grants.
