It’s budget day! Here’s what you need to know about the budget plan President Biden rolled out today.
Biden’s $6.9 Trillion Budget Sets Up Battle With Republicans
President Joe Biden unveiled a $6.9 trillion budget proposal for fiscal year 2024 on Thursday, proposing to increase federal spending and raise taxes on the rich and corporations. The plan, which is dead on arrival in Congress, nevertheless lays down a marker for the White House ahead of high-stakes negotiations with Republicans over raising the federal borrowing limit and setting government funding levels for the fiscal year that starts in October.
As Republicans press for hundreds of billions of dollars in spending cuts, Biden’s 182-page blueprint calls for boosting funding for a wide range of programs while raising taxes on corporations, the wealthy, top earners and investors. It also would cut deficits by nearly $3 trillion over 10 years and extend the solvency of Medicare while lowering health care and prescription drug costs.
"My budget is about investing in America and all of America," Biden told a group of supporters in Philadelphia as he officially unveiled the plan. "Too many people have been left behind and treated like they’re invisible. Not anymore. I promise I see you."
Here’s an overview of the president’s plan and some key takeaways about it.
WHAT’S IN THE BUDGET
The president’s budget request outlines a plan for a more active federal government, with increased funding for programs involved in everything from housing and health care to clean energy and manufacturing — as well as one of the largest peacetime defense packages in U.S. history. It calls for $1.7 trillion in discretionary spending for 2024, including $886 for national security, $688 for non-defense spending and $121 billion for veterans.
Highlights from the budget include:
Health care: As we highlighted earlier this week, Biden wants to shore up the Medicare trust fund with new dedicated taxes while empowering the federal government to negotiate the prices of a wider range of prescription drugs – part of a plan the administration says would save $200 billion over a decade. The budget request also calls for establishing a $35 per month cap on insulin for all Americans, capping the cost of certain generic drug prescriptions at $2 a month, making permanent subsidies for those purchasing insurance plans through the Obamacare marketplaces and providing Medicaid-like coverage to those who live in states that have refused to expand their Medicaid programs as allowed by the Affordable Care Act. The Department of Health and Human Services would see an 11.5% increase in its budget in 2024, to $144 billion, while Medicaid’s home and community services programs would receive $150 billion more in funding over 10 years.
Defense: Biden is requesting $842 billion for the Defense Department in 2024, a 3.2% increase over the $816 billion for this year and the highest level in history, at least in nominal terms. The total includes $170 billion for weapons purchases and $145 billion for research and development, with the procurement budget rising to the highest level since the height of the war in Afghanistan, according to Bloomberg. The administration wants to purchase 83 F-35 stealth jets, up from this year’s count of 80 (and well above the administration’s request for 63 jets last year, which Congress boosted by 17). And there’s another $7 billion in military aid for Ukraine, though the real amount will likely be much higher as Congress provides additional aid through supplemental funding.
The overall national security budget, including Energy Department and other agency programs, would rise to $886 billion, up from $858 billion this year.
Child care and education: Biden wants to provide free universal preschool, boost the value of Pell grants, establish a national paid family and medical leave program, and make two years of community college free.
Energy and infrastructure: The budget requests $4.5 billion for clean energy projects, $16.5 billion for climate and energy research and $23 billion to help communities prepare for storms, floods and wildfires. The administration would also spend nearly $2 billion to upgrade low-income Americans’ homes and $3.2 billion to modernize public housing. And it would boost spending on high-tech infrastructure and research by $6.5 billion, for a total of $25 billion.
Taxes: Biden is proposing a range of new taxes totaling roughly $5 trillion over 10 years to pay for his ambitious plans, with large corporations and the wealthy bearing most of the burden. He wants to raise the corporate income tax rate from 21% to 28%; raise the tax rate on U.S. multinational overseas earnings from 10.5% to 21%; and quadruple the tax on stock buybacks from 1% to 4%.
On the personal income side, Biden proposes to increase the top income tax rate to 39.6% from 37% for those earning more than $400,000 a year, and to raise the capital-gains rate to 39.6% from 20% for those earning at least $1 million. To boost Medicare, Biden wants to raise the tax on wages, self-employment income and investments from 3.8% to 5% for those earning more than $400,000. And Biden also proposes to impose a tax of 25% on households worth more than $100 million, the wealthiest 0.01% of taxpayers, with the levy to include "appreciated assets."
The budget also calls for the permanent restoration of the enhanced Child Tax Credit enacted in the 2021 American Rescue Plan Act, which briefly helped cut child poverty by as much as half by temporarily expanding the annual credit from $2,000 per child to $3,000 for children six years old and above, and to $3,600 for children under six.
The deficit and debt outlook: The White House says that Biden’s budget plan would reduce the deficit by almost $3 trillion over 10 years, relative to the current baseline. Still, the annual deficit would rise from under $1.4 trillion in 2022 to $1.8 trillion in 2024 and then stay above $1.5 trillion for the rest of the decade before topping $2 trillion in 2033.
In all, the Biden budget foresees more than $17 trillion in deficits from 2024 through 2033, and those deficits would balloon the national debt to $51 trillion in 10 years. Debt held by the public would grow from $26 trillion to $43.6 trillion, approaching a record 110% of the economy.
KEY TAKEAWAYS ON THE BIDEN BUDGET
This budget is going nowhere: Presidential budgets tend to be quickly cast aside by Congress and that’s especially true for this plan given the new Republican House majority. Republicans in both congressional chambers were quick to pan the plan.
"President Joe Biden’s budget is a reckless proposal doubling down on the same Far Left spending policies that have led to record inflation and our current debt crisis," Speaker Kevin McCarthy (R-CA) and other House GOP leaders said in a statement. "Despite the federal government collecting as much in taxes from American families as at any point in our history, federal spending is rising even faster and our debt is soaring, burdening hardworking families across America. … This is a spending problem, not a revenue problem. Yet President Biden’s unserious budget proposal includes trillions in new taxes that families will pay directly or through higher costs."
It’s setting up a fight: The president and the White House have sought to contrast Biden’s vision with that of the GOP, with a particular focus on Social Security, Medicare and health care — and an eye toward 2024 election campaigning. As McCarthy presses for negotiations over raising the debt limit, Biden has called on Republicans to release their own budget plan and propose specific spending cuts. That budget was expected to come out next month but now will be delayed until May.
"I want to make it clear I’m ready to meet with the speaker any time — tomorrow, if he has his budget," Biden said Thursday. "Lay it down, tell me what you want to do, I’ll show you what I want to do, see what we can agree on, what we don’t agree on, let’s see what we vote on."
It’s a fight Biden thinks he and Democrats can win since the GOP plan is expected to include deep cuts to a host of popular programs.
"Congressional Republicans keep saying they want to reduce the deficit. But they have not put out a comprehensive plan showing what they’ll cut," White House Office of Management and Budget Director Shalanda Young told reporters. "Will it be Medicare? Social Security? The Affordable Care Act? Veterans’ benefits? We don’t know until they put out a plan. We’re looking forward to seeing their budget so the American people can compare it to what we’re putting out today."
But it’s also risky: McCarthy on Wednesday told reporters that Biden has wasted a month’s time by not following up on an initial debt limit discussion the two men had on February 1. And if the budget is an opening salvo in debt and spending talks with Republicans, it leaves the two sides miles apart with few pathways toward compromise.
Biden is betting on bigger government: The budget plan envisions federal spending continuing to grow dramatically over the coming decade, including much of the social spending Biden proposed in the Build Back Better agenda that got blocked by Sen. Joe Manchin (D-WV). Federal outlays, which totaled $4.4 trillion as of fiscal year 2019, would rise to $6.9 trillion for 2024 and $8.2 trillion by 2029. They would top $10 trillion by 2033.
"The budget suggests Biden’s initial ambitions to pass a generational expansion of government — similar to that of Franklin Delano Roosevelt’s New Deal or Lyndon Johnson’s Great Society — could return as a key rallying cry for the party in 2024," The Washington Post’s Jeff Stein and Tony Romm write.
He’s taking Social Security changes off the table: The budget rules out any cuts to Social Security and says that the administration will work with Congress to ensure that "high-income individuals" pay their fair share into the program. "Biden opted against a proposal offered by some Democratic lawmakers that would impose Social Security payroll taxes on wealthier Americans," Bloomberg’s Justin Sink and Erik Wasson note. "Currently, income over $160,200 isn’t taxed for the program. Budget Director Shalanda Young said the decision was intended to signal that changing the program was ‘not on the table.’"
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, called the lack of a plan to address Social Security’s finances "a glaring omission."
And he purposely focused on the deficit: "If you don’t talk about the deficit, you don’t have the same permission structure to talk about the contrast in solutions because otherwise people will say, ‘That sounds great but we don’t have the money,’" Celinda Lake, Biden’s pollster in 2020, told The Washington Post. "Talking about the deficit is great at turning down the noise so people can see that difference, which is where we really win."
Budget hawks say he’s not going far enough: The Committee for a Responsible Federal Budget also point out that the Biden budget would spend more than $10 trillion on interest payments on the national debt through 2033, more than it would spend on defense or Medicaid.
"The President does deserve real credit for putting forward $3 trillion of deficit reduction in addition to paying for his new priorities," MacGuineas said, adding that Biden also deserves praise for suggesting steps to shore up Medicare’s finances. But she called the proposed spending excessive and warned that the budget "does not go nearly far enough to make reining in our dangerous debt levels a top national priority."
The bottom line: Biden’s budget highlights just how far apart Democrats and Republicans are on fiscal policy. While Republicans are looking to slash spending and avoid any tax increases, Biden is proposing to ramp up spending and pay for it through taxing the rich and corporations. That fight will play out over the coming months — but the budget also shows Biden is determined to not let Republicans try to paint themselves as the champions of fiscal responsibility.
"There’s a vision here and there’s a contrast," Young, Biden’s budget director, told CNN. "You can be fiscally responsible and invest in the American people, or you can pull the rug out from people by going after programs that people absolutely need."
- Biden Unveils $6.9 Trillion Budget, Setting Up Showdown With GOP – Bloomberg
- Biden’s $6.8 Trillion Budget Doubles Down on the Power of Government – New York Times
- Biden Sticks It to Republicans With His Budget Proposal – Politico
- The G.O.P. Quickly Rejected Biden’s Budget, Foreshadowing a Coming Clash – New York Times
- The Biden Budget Nods to Economic Weakness Ahead – New York Times
- Take a Look: How Biden’s Budget Aims to Reduce the Deficit – Washington Post
- Here’s What Biden’s Budget Would Mean — If It Had a Chance – Associated Press
- Republicans Complain About Ballooning Debt, but Their Votes Helped It Happen – New York Times
- Republicans Take Aim at Medicaid as Budget Talks Heat Up – Politico
- McCarthy Uses CBO Briefing to Prod Biden on Debt Limit Talks – The Hill
- Nikki Haley Calls for Changing Retirement Age for Americans Who Are Now in Their 20s – CNN
- America’s $52 Billion Plan to Make Chips at Home Faces a Labor Shortage – Bloomberg Businessweek
- Biden’s Nominee for IRS Chief Confirmed by Senate – Politico
Views and Analysis
- 7 Key Takeaways From President Biden’s $6.9 Trillion New Budget Plan – Jeff Stein, Washington Post
- Takeaways From Biden’s Budget: The President Embraces His Priorities – Alan Rappeport, New York Times
- An Overview of the President's FY 2024 Budget – Committee for a Responsible Federal Budget
- Biden’s FY 2024 Budget Would Result in More Than $4.5 Trillion in Gross Tax Increases – Erica York, Garrett Watson and Alex Durante, Tax Foundation
- A First Look at the Revenue Provisions of Biden’s 2024 Budget – Howard Gleckman, Tax Policy Center
- Let’s Use Medicaid to Help People Pay for Healthy Food – Rachel Nuzum, Washington Post
- How Far Can Biden Go in Expanding Child Care? – Julianna Goldman, Bloomberg
- American Health Care Is Dying. This Hospital Could Cure It – Ricardo Nuila, New York Times
- AI Can Help the IRS Catch Wealthy Tax Cheats – Alexis Leondis, Bloomberg
- A Little Inflation Is Good for the Conservative Cause – Tyler Cowen, Bloomberg