By Jim Tankersley
President Joe Biden earlier this week proposed a $7.3 trillion budget packed with tax increases on corporations and high earners, new spending on social programs and a wide range of efforts to combat high consumer costs like housing and college tuition.
The proposal includes only relatively small changes from the budget plan Biden submitted last year, which went nowhere in Congress, though it reiterates his call for lawmakers to spend about $100 billion to strengthen border security and deliver aid to Israel and Ukraine.
Most of the new spending and tax increases included in the fiscal year 2025 budget again stand almost no chance of becoming law this year, given that Republicans control the House and roundly oppose Biden’s economic agenda. Last week, House Republicans passed a budget proposal outlining their priorities, which are far afield from what Democrats have called for.
Instead, the document will serve as a draft of Biden’s policy platform as he seeks reelection in November, along with a series of contrasts intended to draw a distinction with his presumptive Republican opponent, former President Donald Trump.
Biden has sought to reclaim strength on economic issues with voters who have given him low marks amid elevated inflation. This budget aims to portray him as a champion of increased government aid for workers, parents, manufacturers, retirees and students, as well as the fight against climate change.
Speaking in New Hampshire on Monday, Biden heralded the budget as a way to raise revenue to pay for his priorities by raising taxes on the wealthiest Americans and big corporations.
“I’m not anti-corporation,” he said. “I’m a capitalist, man. Make all the money you want. Just begin to pay your fair share in taxes.”
The budget proposes about $5 trillion in new taxes on corporations and the wealthy over a decade. Administration officials said Monday that those increases would be split equally between corporations and the nation’s highest earners, and that Americans earning less than $400,000 a year would enjoy tax cuts totaling $750 billion under their plans.
“We can do all of our investments by asking those in the top 1 and 2% to pay more into the system,” Shalanda Young, the director of the White House budget office, told reporters.
The president has already begun trying to portray Trump as the opposite: a supporter of further tax cuts for the well-off. “Do you really think the wealthy and big corporations need another $2 trillion tax break?,” Biden asked in New Hampshire, referencing Trump — but not by name. “Because that’s what he wants to do.”
Speaker Mike Johnson and other members of House Republican leadership criticized Biden in a statement released Monday afternoon. “The price tag of President Biden’s proposed budget is yet another glaring reminder of this administration’s insatiable appetite for reckless spending and the Democrats’ disregard for fiscal responsibility,” they said.
Polls have found that Americans are dissatisfied with Biden’s handling of the economy and favor Trump’s approach to economic issues. But the president has been unwavering in his core economic policy strategy, and the budget shows that he is not deviating from that plan.
Biden’s budget proposes about $3 trillion in new measures to reduce the federal deficit over the next decade. That is in line with his budget proposal last year, which narrowed deficits by raising taxes on businesses and the rich and by allowing the government to bargain more aggressively with pharmaceutical companies to reduce spending on prescription drugs.
The budget again calls for raising the corporate tax rate to 28% from 21%, the level Trump set in the tax bill he signed in late 2017. It increases a new minimum tax on large corporations and quadruples a tax on stock buybacks, among other efforts to raise more revenue from companies and individuals who make more than $400,000 a year.
Those savings would build on discretionary spending limits that Biden and congressional Republicans agreed on last year to resolve a standoff over raising the nation’s borrowing limit. They still would leave the nation with historically high budget deficits: about $1.6 trillion a year on average over the next decade, by administration forecasts. As a share of the economy, deficits would decline in that time — but total government debt as a share of the economy would tick upward.
House Republicans released a budget last week that seeks to reduce deficits much faster — balancing the budget by the end of the decade. Their savings relied on economic growth forecasts that are well above mainstream forecasters’ expectations, along with steep and often unspecified spending cuts.
The nonpartisan Committee for a Responsible Federal Budget called the Republican plan “unrealistic in its assumptions and outcomes.” On Monday, the group called Biden’s proposed deficit reduction “a welcome start, but a too timid one.”
Biden and his aides have repeatedly said they believed the projected deficits in his budgets would not hurt the economy. Young and Jared Bernstein, who leads the White House Council of Economic Advisers, repeated that position Monday, even after acknowledging that the budget now forecasts higher government borrowing costs over the next decade than previous budgets have.
Instead of turning toward more aggressive deficit reduction, as prior Democratic presidents have done after losing control of a chamber of Congress, Biden has leaned into the need for new spending programs and targeted tax incentives to bolster growth and the middle class.
In another key area, Biden’s proposal punts on key details: what to do about the provisions of the 2017 Republican tax law, including tax cuts for individuals, that expire in 2025. The budget calls that expiration, which was written into the law in order to hold down its estimated cost, “fiscally reckless.” But it does not specify how Biden would handle the expirations if he wins a second term.
Instead, the budget says Biden would seek to extend tax breaks for people earning less than $400,000 a year, offset with “additional reforms to ensure that wealthy people and big corporations pay their fair share.”