US President Joe Biden
US President Joe Biden unveiled on Thursday his request for $6.9 trillion to fund the federal government during the next fiscal year, though it would not reduce the national deficit until 2026.
Biden's budget again includes a tax hike on the wealthiest Americans and major corporations in a bid to off-set increased spending and draw down the federal deficit. It would establish a 25% minimum tax on the country's wealthiest individuals in what is likely to be a non-starter for congressional Republicans.
It would do so by closing "giant loopholes" in the existing US tax code that billionaires use to ensure that they are taxed at lower rates than average Americans, if they are taxed at all, the White House said in a statement.
But the efforts to combat the deficit would not see it dip until the 2026 fiscal year when it would be projected to fall to 6.1% of GDP from its current level of 6.6%.
The president's budget for the 2024 fiscal year would see it rise to 6.8% that year, then moderate slightly to 6.7% in 2025. The White House estimates that over the next decade the president's plan would cut the deficit by nearly $3 trillion.
The total price tag of the 2024 budget represents a significant increase of over $1 trillion from the levels he requested for 2023 amid persistently high inflation and the Federal Reserve's ongoing efforts to combat the financial phenomena by raising interest rates. An expected half-point hike is set to send the federal funds rate to 5.25% when the Fed convenes March 21-22.
That is astronomically higher than the 0.25% low set during the pandemic to help combat its dire economic fallout as businesses shuttered to help combat the spread of COVID-19.
Biden noted in a message accompanying his budget that he reduced the deficit by over $1.7 trillion during the first half of his administration, calling it "the largest reduction in American history."
"I have signed into law additional deficit reduction by finally making the wealthy and corporations pay their fair share, including with a new 15 percent minimum tax on billion-dollar corporations, many of which had been paying zero in taxes," he said.
"Now it is time to finish the job, building on the ambitious progress we have made with new investments in America's future. My 2024 budget is a blue-collar blueprint to rebuild America in a fiscally responsible way that leaves no one behind," he added.
Part of the plan sees the trust fund that bankrolls Medicare, the government health insurance plan generally reserved for the elderly, having its solvency increased for 25 years. No cuts are included for either Medicare or Social Security.
The president's budget is merely a request, and it will not mirror the final item approved by Congress, which has the constitutional authority to set the budget. The president's proposal merely lays the groundwork for what is certain to be bitter negotiations with lawmakers.
Office of Management and Budget Director Shalanda Young framed the document as "a roadmap" to build on Biden's "economic progress," notably record-low unemployment and small business growth. She, however, added that the administration is "prepared to" engage in talks with lawmakers after striking a budget deal in December.
"Congressional Republicans keep saying they want to reduce the deficit, but they haven't been out a comprehensive plan showing what they'll cut. Will it be Medicare, Social Security, the Affordable Care Act, veterans’ benefits? We don't know until they put out a plan,” she said. “We're looking forward to seeing their budget so the American people can compare it to what we're putting out today, this president's vision.”
Biden will present the budget to the American people during an afternoon address in the battleground state of Pennsylvania.