US President Joe Biden is gearing up for his anticipated re-election bid in 2024 with his upcoming federal budget plan. The plan includes a range of spending proposals and tax increases aimed at the wealthy and will be unveiled in a swing state on Thursday afternoon in Pennsylvania. However, the proposed budget is expected to encounter significant opposition in Congress this year, particularly after GOP won control of the House of Representatives in the November 2022 midterm elections. As a result, it is unlikely that large portions of the budget will be enacted.
The expected federal budget plan by US President Joe Biden will contain spending proposals and increased taxes for the wealthy, serving as a blueprint for his potential 2024 re-election campaign.#BidenBudget #Biden #JoeBiden #Biden2024 #usbudget #BudgetSession2023 #Budget2023 pic.twitter.com/qzCrMKmqlt
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Biden’s budget proposal represents an important political maneuver and outlines his vision for the country’s future, making it a key part of his re-election strategy. Despite opposition from Republican House Speaker Kevin McCarthy, Biden’s budget plan will proceed as a political statement. McCarthy had previously threatened to block an increase in the federal borrowing limit of $31.4 trillion unless Biden agreed to cut federal spending.
However, the Democratic President plans to address the issue of the national deficit by cutting it down by almost $3 trillion over a decade. This promise was made during his State of the Union address. To achieve this, Biden aims to increase taxes on those earning over $400,000 annually and eliminate certain corporate tax breaks enacted under former President Donald Trump in 2017. This approach will likely face resistance from Republicans in Congress, making it uncertain how much of the plan will be implemented.
White House Director Praises Biden’s Proposed Budget Plan
Shalanda Young, the White House Office of Management and Budget (OMB) Director, has commended Biden’s budget proposal, providing a roadmap to continue the progress made thus far and complete the job. According to the White House, the plan includes increased spending and aims to reduce the deficit by implementing a minimum tax rate of 25% on billionaires and doubling the capital gains tax from 20%. These measures are intended to help fund the proposed higher outlays and bring the deficit under control. However, it remains to be seen how Congress will receive these proposals and whether they will ultimately be implemented.
Highlights of the upcoming Budget
Biden’s budget proposal outlines the following key measures to address the national deficit:
- The budget promises to cut nearly $3 trillion over a decade, achieved through tax increases on high earners and companies
- The proposal suggests raising the Medicare tax on income above $400,000 from 3.8 percent to 5 percent to keep the healthcare program solvent. Additionally, the budget aims to expand the federal government’s authority to negotiate drug prices
- The budget proposes quadrupling the tax on stock buybacks from 1 percent to 4 percent. This measure incentivizes companies to invest in their growth rather than prioritizing shareholder returns
- The president’s proposal calls for the introduction of a “billionaire minimum income tax” – a 25 percent minimum tax on households with a net worth exceeding $100 million
- The budget also includes a plan to increase the corporate tax rate to twenty-eight percent, which would be higher than the current rate but still lower than the 35 percent rate in place prior to former President Donald Trump’s 2017 tax cuts.
- The proposal seeks to expand the child tax credit for lower-income families, a provision already implemented by 22 states. It also intends to reduce the cost of childcare and provide free preschool to all four-year-olds to boost the economy and enable more women to re-enter the workforce
In addition, the budget proposes cutting tax benefits for various groups, including oil and gas companies, real estate investors, fund managers, wealthy retirement savers, and cryptocurrency traders. This measure is intended to redirect funds to programs that support middle- and lower-income families.
Mishmash of Shell Games
Mike Pence, a Republican contemplating a presidential run in 2024, criticized Biden’s budget proposal. Pence referred to the plans as a “mishmash of shell games, budget gimmicks, and massive tax hikes,” adding that they would impede economic growth while only delaying the insolvency of Medicare for a limited time. Pence suggested that Biden could reduce the deficit by repealing certain policies, such as the student loan forgiveness plan.
According to an official statement from the White House, the budget proposal is rooted in the President’s firm belief that the tax system should favor work over wealth. It aims to prevent the wealthiest Americans and corporations from enjoying lower tax rates than teachers or firefighters. However, John Gimigliano, a senior tax executive at KPMG, believes that the proposals are unlikely to pass as law. Despite this, he acknowledges their political significance in advancing the President’s agenda.
In a statement, John Gimigliano, a senior tax executive at KPMG, acknowledged that the tax proposals outlined in the budget proposal were unlikely to gain much support in a divided Congress. However, he believes that it is essential for the President to promote the administration’s views on the tax system and keep these ideas alive in the public’s minds as the country heads toward the 2024 elections.
Republicans Propose $150bn in Cuts to Non-defense Discretionary
According to the Federal Reserve, federal spending related to the COVID-19 pandemic by the Trump and Biden administrations in 2020 and 2021 added 2.5 percentage points to US inflation. Republican lawmakers have blamed President Biden’s spending policies for driving inflation to nearly 40-year highs. As a result, Republicans are preparing to cut $150 billion from non-defense discretionary programs, including a $25 billion reduction from the Department of Education, foreign aid, and programs to prevent sexually transmitted diseases. The proposed cuts are expected to save $1.5 trillion over ten years.