Joe Biden’s budget proposal is less likely to pass

With Republicans in control of the House, there is little chance that President Joe Biden’s new budget plan will become law. Instead, the financial blueprint he is announcing Thursday in Philadelphia will serve as a political talking point for the president, who is preparing to run for reelection.

“When you look at the budget, it’s a statement of the president’s values,” said White House press secretary Karine Jean-Pierre.

Several key proposals are designed to draw sharp contrasts with Republicans.

Some special things about Biden’s plan:

Biden stresses fiscal responsibility

Biden’s budget covers the next 10 years. Overall, he expects an additional $4.7 trillion in tax revenue and $800 billion in savings from making changes to government programs. Biden also wants $2.6 trillion in new spending. This leaves him with an estimated $2.9 trillion shortfall in deficit.

The president emphasized fiscal responsibility as he prepared his budget, portraying Republicans as not serious about streamlining the nation’s finances. Republicans have said Biden’s plan does not go far enough, but have not released proposals of their own.

minimum tax on billionaires

Biden often talks about making companies and the wealthy “pay their fair share,” and the budget is designed to advance that goal.

The President wants a 25% tax on the richest 0.01% of Americans. The White House calls it the “minimum tax on billionaires”. The idea is designed to extract more revenue from income that is not derived from salaries, which the administration describes as “special treatment” and a “huge loophole”.

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Biden also wants to roll back tax breaks implemented under his predecessor, former President Donald Trump. For example, people earning more than $400,000 in a year will once again face a top tax rate of 39.6%.

The budget proposal would also close the “carried interest” loophole that allows wealthy hedge fund managers and others to pay their taxes at a lower rate.

Medicare funding boosted

A major trust fund that funds Medicare, which provides health care to older adults, is on track to bankruptcy in about five years, meaning it will be unable to fully cover the cost of benefits. The White House says Biden’s plan would push that date back to 2050.

Some of the money would come from expanding the federal government’s ability to negotiate the cost of prescription drugs, something that began with the Inflation Reduction Act, which Biden signed last year. He wants to increase the Medicare tax rate from 3.8% to 5% on income over $400,000 a year, including wages and capital gains.

Biden has often targeted Republicans over his proposals to reduce Medicare benefits or force Congress to reauthorize the program. (Social Security is similarly being threatened by Republicans, Biden often says.) So expect to hear more from the White House about how the president’s plan will help older Americans.

fully refundable child tax credit

Congress expanded the child tax credit during the pandemic to help families cope with the economic fallout, but the extra money expired last year.

Now Biden wants to restore the credit to its previous level. This change would increase families from $2,000 to $3,600 per child. The credit would be “fully refundable,” meaning households could receive all the money even though they owed no taxes. This approach is designed to ensure credit benefits to low-income households.

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reduction in cancer mortality

Biden made fighting cancer part of a “unity agenda” he outlined near the start of his administration, and he wants $2.8 billion to advance that goal.

He described the effort as a “cancer moonshot” that should become a “national objective” for Americans. This is a personal matter for Biden. Their eldest son, Beau, died of a brain tumor. In addition, both the president and first lady Jill Biden had recently removed lesions that contained basal cell carcinoma, a type of skin cancer.

Biden wants to cut the cancer death rate in half over the next quarter-century.

eye on china

Part of the budget is designed to help Biden attempt to steer US foreign policy to counter China’s growing influence.

The Pentagon would receive $842 billion, which includes funding for the modernization of the US nuclear arsenal. There’s also a proposed 5.2% pay raise for soldiers, designed to help the military boost its lagging recruits.

In addition, the budget will allocate $7.1 billion to renew agreements with three Pacific island nations that China is courting. This amount includes $6.5 billion over 20 years for the Marshall Islands, Micronesia and Palau, as well as an additional $634 million to maintain US Postal Service operations there.

Under “Compact of Free Association” agreements with all three, the US provides the islands with a range of services that range from weather forecasting to disaster management, air traffic control and mail delivery.

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