Biden’s $6.8 Trillion Budget Proposes New Social Programs and Higher Taxes
WASHINGTON — President Biden on Thursday proposed a $6.8 trillion budget that seeks to increase spending on the military and a wide range of new social programs while also reducing future budget deficits, defying Republican calls to scale back government and reasserting his economic vision before an expected re-election campaign.
The budget contains some $5 trillion in proposed tax increases on high earners and corporations over a decade, much of which will offset new spending programs aimed at the middle class and the poor. It seeks to reduce budget deficits by nearly $3 trillion over that time, compared with the country’s current path.
It reaffirms Mr. Biden’s case that he can prevent the growing debt burden from weighing on the economy while expanding spending and protecting popular safety-net programs — almost entirely by asking companies and the wealthy to pay more in taxes.
“This president clearly believes the way to grow this economy is investing in the middle class and working families,” Shalanda D. Young, the director of the White House budget office, told reporters on Thursday. “I’ll take our plan as fiscally responsible any day.”
But after claiming credit for a $1.7 trillion decline in the annual deficit over the past year, Mr. Biden now sees the deficit increasing again in the 2024 fiscal year, to $1.8 trillion. The jump is larger than other forecasters, like the Congressional Budget Office, have projected. It is driven by rising costs of servicing the national debt as the Federal Reserve raises interest rates to curb inflation and by new programs the president is proposing that are not fully offset by tax increases in their first year.
The plan was certain to draw swift criticism from Republicans, who are locked in an economically perilous debate with Mr. Biden over the borrowing limit, which House conservatives refuse to raise unless he agrees to sharp spending cuts. The proposals stand little chance of becoming law because Republicans won control of the chamber in November.
Instead, Mr. Biden’s budget request was a political statement of values aimed at winning public opinion amid the debt-limit fight and a nascent 2024 campaign. He was set to unveil it on Thursday afternoon in a speech in Philadelphia — a swing-state setting.
“The budget reflects our values as a nation — a nation of good people, growing in a new age of possibilities, and standing as a beacon to the world,” Mr. Biden wrote in the document’s introduction. “Together, let us put those values into practice and prove that democracy delivers as we keep building a stronger, fairer economy that leaves no one behind.”
The proposals showcased his early success in expanding the federal government’s role in the economy, and they reaffirmed his push for more. On Mr. Biden’s watch, its numbers show, domestic spending in areas like research and support for manufacturing has grown significantly larger as a share of the economy than was considered in the budget proposals of the last Democratic administration, under President Barack Obama, when Mr. Biden was vice president.
In his first two years as president, Mr. Biden signed laws to expand and rebuild critical infrastructure like water pipes and highways, bolster U.S. manufacturing of semiconductors and other high-tech goods, and accelerate a transition from fossil fuels toward low-emission sources of energy to fight climate change. He delivered military aid to Ukraine in its fight against Russia and signed a bipartisan law to increase federal medical care for military veterans exposed to toxic burn pits.
He also left much of his economic agenda unfinished, a fact reflected in his budget, which renewed calls for programs that failed to pass muster when his party controlled Congress.
The president’s budget proposed $400 billion to deliver affordable child care for parents, $150 billion for home care for older Americans and the disabled and nearly $400 billion to make permanent expanded health coverage assistance through the Affordable Care Act. He would spend $325 billion to guarantee paid leave for workers and nearly $300 billion combined for free community college and prekindergarten for students. He proposes $100 billion in additional assistance to lower housing costs for homeowners and renters.
Mr. Biden would reinstate for three years an expanded child tax credit, which was included in the economic aid bill he signed in 2021 but expired last year, as a means of reducing child poverty. He would make permanent a change in the credit that allows people to benefit from it in full even if they do not make enough money to owe federal income taxes. Together, the changes would cost more than $400 billion.
To help offset costs, Mr. Biden proposed a series of tax increases on corporations and the wealthiest Americans. They include a 25 percent tax aimed at billionaires (he proposed a similar tax last year but at a lower rate: 20 percent). He also proposed quadrupling a tax on stock buybacks and renewed his call to roll back President Donald J. Trump’s tax cuts for high earners and to raise the corporate income tax rate to 28 percent from 21 percent.
Mr. Biden proposed raising and expanding a tax on Americans earning more than $400,000 as part of efforts to extend the solvency of Medicare by a quarter-century. He is also proposing new savings for the government based on more aggressive negotiation over prescription drug prices.
But for the third consecutive budget, Mr. Biden did not propose any new initiatives to extend the solvency of Social Security — unlike in the 2020 campaign, when he proposed to expand benefits and bolster the program’s trust fund by effectively raising payroll taxes on people earning more than $400,000 a year.
Last year’s budget painted a rosy and ultimately over-optimistic picture of the U.S. economy. The administration expected gross domestic product to grow 4.2 percent after adjusting for inflation, for instance, but it ultimately climbed by a more modest 2.1 percent.
The new budget’s projections were more muted. The White House sees the economy growing by only 0.6 percent after adjusting for inflation this year, a weak pace that is in line with outside expectations. Even more notably, the White House is predicting a substantial increase in the unemployment rate — to 4.3 percent, a notable rise from 3.4 percent in January. Alongside that slowdown, inflation is expected to moderate.
Mr. Biden sees the gross national debt increasing by about $18 trillion through 2033, rising to just above $50 trillion. But his budget suggests that growth will not threaten the economy. “The economic burden of debt would remain low and in line with recent historical experience over the next decade,” administration officials wrote in the proposal.
Much of the budget’s contents were holdovers from Mr. Biden’s previous proposals. But it also included a few new ones. One of them is a tax on the energy used in creating new digital currency assets, known as cryptocurrency mining. That practice relies on large amounts of electricity and generates emissions that contribute to climate change.
Administration officials want to discourage the practice, which they say impedes the country’s energy transition. So they proposed a 30 percent tax on the electricity used in it, phased in over the course of three years, whether that comes from an electric utility or a localized source like a home solar panel, on the theory that the energy involved would be put to better purpose in another use.
Jeanna Smialek, Ana Swanson and Alan Rappeport contributed reporting.