President Joe Biden unveiled his budget proposal on Thursday, a sweeping spending plan that includes higher taxes for corporations and wealthy individuals, an increase in defense spending, and an attempt to reduce the deficit by $3 trillion over a decade. Despite the high-profile rollout, the budget has no chance of passing Congress.[0]
The budget would raise the top income tax rate to 39.6% from 37% on single filers making more than $400,000 a year and married couples making more than $450,000 a year. Biden also proposed a 25 percent tax on the nation’s wealthiest 0.01 percent of families, a minimum tax on billionaires, a quadrupling of the 1 percent tax on stock buybacks, and taxing capital gains at 39.6 percent for people with income of more than $1 million.[1] Furthermore, the budget calls for raising the Medicare tax rate for people earning more than $400,000 per year, and bringing down drug costs to keep the healthcare program solvent.[2]
For defense spending, Biden has asked Congress to allocate $842 billion to the Pentagon, representing a $26 billion increase compared with the current fiscal year and a hike of nearly $100 billion since fiscal year 2022.[3] The proposed budget also includes an increase to the stock buyback tax from 1 percent to 4 percent, and a 5.2 percent raise for military and civilian federal employees.
Biden’s budget proposal also includes an effort to “protect and strengthen” Social Security and Medicare.[4] The plan would extend the solvency of the Medicare Trust Fund by at least 25 years, without removing benefits or raising costs.[5] An additional $1.4 billion is allocated to Social Security in order to enhance its services.[6]
However, the budget does not address Social Security’s long-term financial health, and would still lead to deficits of at least $1.5 trillion in every year of the 10-year budget window. The White House estimates the budget would raise $4.7 trillion in revenue, for over $2.8 trillion in 10-year deficit reduction, but the Congressional Budget Office’s analysis of the 10-year budget showed that since last May, the projected 10-year deficit has increased by $3.082 trillion.[7]
Under Biden’s plan, debt as a share of the economy would reach 110 percent of GDP by 2033, meaning the U.S.
0. “Biden’s Budget Aims to Hit Republicans Where It Hurts” The New Republic, 10 Mar. 2023, https://newrepublic.com/article/171079/bidens-budget-doomed-still-matters
1. “Biden’s $5 trillion tax gambit catches Congress by surprise” The Hill, 12 Mar. 2023, https://thehill.com/homenews/administration/3894747-bidens-5-trillion-tax-gambit-catches-congress-by-surprise/
2. “Biden sets up for an election fight with his budget proposal” Al Jazeera English, 9 Mar. 2023, https://www.aljazeera.com/economy/2023/3/9/biden-sets-up-for-an-election-era-fight-with-his-budget-proposal
3. “Biden’s $842B Pentagon Budget Proposal Would Boost New Weapons” Defense One, 9 Mar. 2023, https://www.defenseone.com/policy/2023/03/bidens-842b-pentagon-budget-proposal-would-boost-new-weapons/383820/
4. “Opinion | Biden Budget Refutes Itself on Social Security and Medicare” The Wall Street Journal, 10 Mar. 2023, https://www.wsj.com/articles/biden-budget-refutes-itself-on-social-security-and-medicare-trust-funds-general-revenue-entitlements-deficit-576f44dc
5. “Biden unveils ‘blue-collar’ budget plan with tax hikes for America’s wealthiest” The Guardian US, 9 Mar. 2023, https://www.theguardian.com/us-news/2023/mar/09/joe-biden-federal-budget-cutting-deficit
6. “Biden budget would cut deficit by $3 trillion over next decade with 25% minimum tax on richest Americans” CNBC, 9 Mar. 2023, https://www.cnbc.com/2023/03/09/biden-budget-would-cut-deficit-by-3-trillion-over-next-decade-with-25percent-minimum-tax-on-richest-americans.html
7. “White House blueprint would raise taxes, boost spending” Roll Call , 9 Mar. 2023, https://www.rollcall.com/2023/03/09/white-house-blueprint-would-raise-taxes-boost-spending