Biden’s budget underlines the divide with Republicans and Trump

President Biden on Monday proposed a $7.3 trillion budget packed with tax hikes on corporations and high earners, new spending on social programs and a wide range of efforts to combat high consumer costs such as housing and college tuition.

The proposal includes only relatively minor changes from the budget plan Biden submitted last year that went nowhere in Congress, though it reiterates his call for lawmakers to spend about $100 billion to strengthen border security and supply of aid to Israel and Ukraine.

Most of the new spending and tax increases included in the FY 2025 budget again have almost no chance of becoming law this year as Republicans control the House and outright oppose Mr. Biden’s economic agenda. Last week, Republicans in the House of Representatives adopted a budget proposal outlining their priorities, which are far removed from what Democrats have asked for.

Instead, the document will serve as a draft of Mr. Biden’s policy platform as he seeks reelection in November, along with a series of contrasts intended to distinguish him from his presumptive Republican opponent, former President Donald J. Trump.

Mr. Biden has sought to regain his strength on the economic front from voters who gave him low marks amid high inflation. This budget aims to portray him as a champion of greater government support for workers, parents, manufacturers, retirees and students, and of the fight against climate change.

Speaking in New Hampshire on Monday, Mr Biden announced the budget as a way to raise revenue to pay for his priorities by raising taxes on the wealthiest Americans and big corporations.

“I’m not against business,” he said. “I’m a capitalist, man. Earn all the money you want. Just start paying your fair share of taxes.”

The budget proposes about $5 trillion in new taxes on corporations and the wealthy over the next decade. Administration officials said Monday that these increases would be split evenly between corporations and the nation’s highest earners, and that Americans earning less than $400,000 a year would get tax cuts totaling $750 billion under their plans.

“We can make all our investments by asking those in the top 1 and 2 percent to pay more into the system,” Shalanda Young, the director of the White House budget office, told reporters.

The president is already trying to portray Trump as the opposite: a supporter of further tax cuts for the wealthy. “Do you really think the rich and big corporations need another $2 trillion tax break?” Mr. Biden asked in New Hampshire, referring to Mr. Trump — but not by name. “Because that’s what he wants to do.”

Speaker Mike Johnson and other members of the Republican leadership in the House of Representatives criticized Mr. Biden in a statement released Monday afternoon. “The price tag of President Biden’s proposed budget is yet another glaring reminder of this administration’s insatiable appetite for reckless spending and Democrats’ disregard for fiscal responsibility,” they said.

Polls have shown that Americans are dissatisfied with Biden’s handling of the economy and prefer Trump’s approach to economic issues. But the president has been steadfast in his core economic policy strategy, and the budget shows he is not deviating from that plan.

Biden’s budget proposes about $3 trillion in new measures to reduce the federal deficit over the next decade. That’s in line with his budget proposal last year, which reduced deficits by raising taxes on corporations and the wealthy and having the government negotiate more aggressively with pharmaceutical companies to reduce spending on prescription drugs.

The budget again calls for an increase in the corporate tax rate from 21 percent to 28 percent, the level Trump set in the tax bill he signed in late 2017. It raises a new minimum tax on large companies and quadruples a tax on stock buybacks. including efforts to generate more revenue from companies and individuals making more than $400,000 a year.

These cuts would build on the discretionary spending limits that Biden and Republicans in Congress agreed to last year to resolve an impasse over raising the nation’s borrowing limit. They would still leave the country with historically high budget deficits: an average of about $1.6 trillion a year over the next decade, according to government forecasts. As a share of the economy, deficits would decline over that time, but total government debt as a share of the economy would rise.

Republicans in the House of Representatives released a budget last week that aims to reduce deficits much faster – bringing the budget to a balanced position by the end of the decade. Their savings were based on economic growth forecasts well above the expectations of mainstream forecasters, along with steep and often unspecified budget cuts.

The nonpartisan Committee for a Responsible Federal Budget called the Republican plan “unrealistic in its assumptions and results.” On Monday, the group called Biden’s proposed deficit reduction “a welcome start, but too timid a start.”

Mr. Biden and his aides have repeatedly said they believed projected deficits in his budgets would not hurt the economy. Ms. Young and Jared Bernstein, chairman of the White House Council of Economic Advisers, reiterated that position Monday, even after acknowledging that the budget now projects higher government borrowing costs over the next decade than previous budgets.

Rather than focusing on more aggressive deficit reduction, as previous Democratic presidents have done after losing control of a chamber of Congress, Mr. Biden has focused on the need for new spending programs and targeted fiscal stimulus to boost growth and to stimulate the middle class.

The new proposal continues that trend. It would create a national paid leave program for workers. It would restore an expanded child tax credit that Mr. Biden temporarily created in his $1.9 trillion economic stimulus law in 2021. That credit helped significantly reduce child poverty in the span of a year before it expired. That recovery would last just a year, but administration officials said Monday they hope to make it permanent as part of a broader debate on taxes in 2025.

The budget also includes new efforts to help Americans struggling with high costs. That issue has dogged Mr. Biden among voters since inflation rose to the highest level in four decades on his watch, even as price increases have cooled over the past year. Mr. Biden previewed many of those efforts in his State of the Union address last week, including new tax breaks for certain homebuyers and expanded help for people to get health insurance through the Affordable Care Act.

Mr. Biden also called for new efforts to improve the solvency of Social Security and Medicare. In the budget, he opposed cuts to benefits for the programs and any additional contributions from workers making less than $400,000 a year.

On Monday, Ms. Young suggested that Mr. Biden would try to strengthen Social Security in part by targeting a cap on income subject to the payroll taxes that fuel the program — a move he has endorsed specifically for Medicare. She said Mr. Biden would improve his solvency “by asking high-income Americans to pay their fair share.” If you make a million dollars in this country, you will finish paying your Social Security taxes sometime in February.”

In another key area, Mr. Biden’s proposal focuses on key details: what to do about provisions of the 2017 Republican tax law, including tax cuts for individuals, that expire in 2025. The budget calls this expiration, which is laid down in law to keep the estimated costs within limits, ‘fiscally reckless’. But it does not specify how Mr. Biden would handle the expiration dates if he wins a second term.

Instead, the budget says Biden would seek to extend tax breaks for people making less than $400,000 a year, offset by “additional reforms to ensure wealthy people and big corporations pay their fair share.”