Over the longer term, the White House says Biden's plan would reduce the deficit, thanks in large part to tax hikes on corporations and the rich. But in fiscal 2024, it would spend $1.8 trillion more than the government would take in.
Since Congress controls the purse strings — and Republicans control the House of Representatives — the plan is more of a political exercise than a practical roadmap for spending. Rather, it's an opening volley in a high-stakes political fight over government funding and the debt ceiling and is something that Biden can point to during what's expected to be a second run for the White House in 2024.
Biden formally released the plan in a speech in Philadelphia Thursday afternoon, going to a politically critical state to draw attention to something that is often little more than a document dump.
"I value everyone having an even shot," Biden said. "My budget reflects what we can do to lift the burden on hard-working Americans."
"Too many people have been left behind or treated like they're invisible. I promise you, I see you," Biden said. "Families have started to breathe a little easier but we've got further to go."
The event was held in a union hall, and though the speech was centered around his fiscal plans, it had the feel of a campaign stop, with Biden touting his priorities on education, infrastructure, and lowering the cost of drugs.
The crowd chanted "four more years" as Biden began his remarks, and there were signs reading "Let's Go Joe" and "Local 252 for Biden."
Experts say the debt will still rise
No matter the party in power, presidential budget proposals are almost always dead on arrival in Congress.
"It's not gonna happen," said Bob Bixby, executive director of the Concord Coalition, a group that advocates for fiscal responsibility. "It's a campaign document."
The White House says Biden's plan would reduce the deficit by $3 trillion over 10 years. But Bixby noted that the Congressional Budget Office is projecting $20 trillion will be added to the national debt over that period, driven by an aging population, rising healthcare costs, higher interest rates on the debt, and the compounding of tax cuts passed during the Trump administration.
The government would need a plan that cuts the deficit by more than twice what Biden is proposing to keep the debt from rising as a percentage of the economy, Bixby said.
"Hold on to your seat belts: the debt is going up," he said.
Here's what Biden's plan would involve
The budget includes new spending on programs that Biden has campaigned on in the past:
- Funding aimed at increasing the amount of affordable housing
- Free preschool through funding for a federal-state partnership
- Reinstates the expanded child tax credit, which went into effect during the pandemic, but expired at the end of 2021
- An increase in Pell grants and more benefits for students going to historically Black colleges or universities and other minority-serving institutions
- Allows people on Medicaid to get access to certain HIV/AIDS and Hepatitis C treatments that the White House said would ultimately save taxpayer money and provide better care
In order to pay for funding Biden's priorities, the president's plan proposes an increased tax rate on wealthier Americans.
"I'm not going after any ordinary folks," Biden said in his remarks, noting that his plan won't raise taxes on anyone making less than $400,000 a year.
- A minimum tax on billionaires of 25%, impacting the wealthiest .01%
- An increase to the tax rate corporations pay in taxes on their profits to 28%
- A cut in tax breaks for oil and gas companies and real estate investors
- Quadrupling a tax on stock buybacks to 4% from 1%
- Ending tax breaks used by cryptocurrency transactions
- Reverses former President Donald Trump's 2017 tax cuts so that people making more than $400,000 per year pay 39.6%
Biden proposes to let Medicare negotiate prices for a broader range of prescription drugs. Some of this was allowed under last year's Inflation Reduction Act.
Biden's budget also includes funding for other government efforts, like funding to increase security at U.S. borders and combat fentanyl tracking. There are also investments in fighting climate change and global warming.
The budget is grist for the debt ceiling debate
Washington is focused on fiscal issues at the moment because Congress needs to raise the debt ceiling this summer, or the U.S. government will run out of cash to pay its bills.
Republicans have said they will work to extract spending cuts from the White House as a condition for raising the debt limit. They say spending is out of control.
House Speaker Kevin McCarthy called Biden's plan "completely unserious" on Twitter.
"Mr. President: Washington has a spending problem, NOT a revenue problem," McCarthy said.
But Republicans haven't said what spending cuts they favor. Biden's budget will put the ball in their court.
"We'll analyze his budget, and then we'll get to work on our budget," McCarthy said on Wednesday.
A lot is squeezed into President Joe Biden’s new 182-page budget proposal, which the president describes as “a blue-collar blueprint to rebuild America in a fiscally responsible way.”
Congress is unlikely to pass all, or even most, of the $6.88 trillion budget as written. Still, presidential budgets are important: They tell lawmakers and voters about an administration’s political priorities. And even though Congress often simply ignores major portions of the request, the president’s budget can still serve as a starting point for legislative talks. Last year, the White House’s priorities for an infrastructure deal influenced the final package Congress ultimately passed.
This year, as Democrats no longer have control of Congress, the resulting budget document reflects both political pragmatism and political ambition. It also gives the clearest glimpse yet into how the White House plans to position itself in the upcoming fights around the debt ceiling and the 2024 reelection campaign. Biden is embracing the rhetoric of fiscal responsibility and national security, domains that have historically been Republicans’ turf. But he is doing so while rejecting any calls to roll back the welfare state. Instead, the budget lays the groundwork to expand it.
In addition to calls for increased military spending and new investments in the social safety net, the Biden budget aims to protect programs like Medicare and Social Security, largely by promoting new taxes on corporations and the richest Americans.
Perhaps the clearest way to understand this new budget is to compare it to Biden’s first two.
Five months after his inauguration, Biden proposed dramatic increases in federal spending, including a 16 percent increase in non-military spending for priorities like public health, preschool, education, and fighting climate change. The administration argued that the low-interest rates at the time presented an opportunity to make big investments in the country. With Democratic control over both chambers of Congress, Biden’s first budget reflected a confidence that all members of his party would ultimately fall in line with his broadly ambitious social agenda — a miscalculation that became clear when Sens. Joe Manchin and Kyrsten Sinema raised objections.
The following year, when Biden released his budget, he did so in a very different political climate. The Russian invasion of Ukraine was underway, the Biden administration had failed to pass its ambitious Build Back Better agenda, and gas and grocery prices were on the rise. Voters were expressing concerns in polls about crime and inflation, and Sen. Manchin — the key Democratic holdout to Build Back Better in the Senate — had been voicing concerns for months about the federal deficit. Republicans, meanwhile, were blasting the Democrats’ pandemic spending for fueling higher prices.
In a nod to Republicans and fiscal moderates like Manchin, Biden’s second budget made a clear pivot toward security and economics. The second White House budget included significant increases in military spending, new proposals focused on reducing the federal deficit, and far less of an emphasis on the big social programs his administration failed to enact in 2021. There was more focus on “bipartisan unity” investments, like tackling the opioid crisis and health care for military veterans.
Biden called for shrinking the government’s debt by $1 trillion over 10 years, largely through imposing higher taxes on corporations and the wealthy, including a “Billionaire Minimum Income Tax” on Americans with assets worth more than $100 million. The administration also tried to take credit for the deficit contracting in 2021, which was technically true, though experts say that had more to do with pandemic stimulus spending leveling off.
This year, in his third year in office and staring down an impending fight over the debt ceiling as well as a likely reelection campaign, the Biden administration has recommitted to that focus, now calling to trim the federal debt by nearly $3 trillion (while increasing Pentagon spending).
The White House is also staking out a strong defense of protecting Medicare and Social Security, entitlement programs that budget experts say are straining federal purse strings, and Republicans have openly discussed cutting. One new tax proposal on top earners would go toward funding Medicare, as would new proposals on negotiating drug costs.
The White House knows it’s at a disadvantage in voters’ minds when it comes to the economy. Polls typically show voters trust Republicans more on economic issues. But Medicare and Social Security are both extremely popular with voters, as are higher taxes on the rich and wealthy.
On social spending, the White House is sticking with key Democratic priorities, including a restoration of the expanded child tax credit, an expansion of free school meals, paid family leave, new spending on high-poverty schools, child care, and universal preschool for 4-year-olds. (In earlier budgets, the White House called for funding of universal preschool for 3-year-olds too, but said it wanted a more targeted approach this year.)
While these are unlikely to pass this year with a Republican-controlled House, it signals what Biden will likely campaign on, should he run for reelection as he’s expected to.
The budget shows an administration gearing up for a series of fights and previews their strategy for winning them: the White House is trying to position Democrats as the more fiscally responsible party, with priorities that match the public.