Here’s what to watch for in Biden’s budget
Republicans and Democrats alike are bracing for the release of President Biden’s proposed budget for fiscal year 2024, as a fight over the nation’s debt limit begins to heat up on Capitol Hill.
While the budget isn’t set for release until Wednesday afternoon, some details have already begun to trickle out around what the request will entail, including reports of plans to tackle the country’s deficits by trillions over the next decade as Biden teases tax hikes targeting wealthier Americans.
The request isn’t expected to make it far in the divided Congress, as the now GOP-led House gears up plans for their own massive budget rollout to bring down spending in the coming weeks. But Democrats see the forthcoming spending proposal as a framework for the priorities the party plans to push in bipartisan spending negotiations later this year.
Here are some areas to watch for in Biden’s budget.
Tax increases on wealthier taxpayers
In recent weeks, Biden has detailed plans to push for tax hikes targeting wealthier Americans, laying the groundwork for another partisan battle over taxes in Washington.
While previewing his fiscal plan during the State of the Union address last month, Biden said the budget proposal would lower the nation’s deficit by $2 trillion over the next decade. But recent reports have put the figure in the ballpark of almost $3 trillion.
Biden has vowed his plan won’t include tax increases on Americans earning less than $400,000 annually, instead centering his focus on higher income individuals and corporations – an idea that has enjoyed wide support in his party.
Last month, Biden offered a proposal that would require wealthier households to pay a 20 percent tax on income and unrealized gains of liquid assets. The White House is also expected to push for beefing up the stock buyback tax that Democrats passed as part of the Inflation Reduction Act last year, among other proposals.
Talk of such proposals has already been met with fierce opposition from Republicans, but also arrives as Washington remains split over how to address the nation’s rising debt, which stands at more than $31 trillion.
Ahead of the president’s budget rollout on Wednesday, the Biden administration released a plan aimed at shoring up solvency for Medicare.
The plan seeks to extend the lifetime for Medicare’s Hospital Insurance Trust Fund by at least 25 years, as the fund is projected to become insolvent by 2028. But to do so, the proposal also calls for a higher tax rate “on earned and unearned income above $400,000.”
The plan prompted immediate pushback from Republicans who decried the proposed tax as “massive,” while some liberals have applauded the push, which also includes measures aimed at cutting costs for beneficiaries, as a “step in the right direction.”
The pitch faces a long shot in the Republican-controlled House, where leaders have drawn red lines around any tax increases. It also shows a stark contrast between where the White House is on proposed reforms to address funding issues facing the entitlement program, compared to ideas offered by some Republicans that are aimed at tightening eligibility requirements.
Plan to ‘strengthen’ Social Security
In the Biden administration’s recent announcement detailing the Medicare proposal, the White House also said the president’s upcoming fiscal 2024 budget would also include his plan to “strengthen Social Security.”
The Tuesday announcement didn’t include further mentions of the entitlement program, but the development comes as the fate of Social Security, which some projections say could reach insolvency in less than a decade, has dominated discussions among lawmakers in recent weeks.
Democrats have pointed to past GOP proposals to cut Social Security and Medicare to argue the GOP can’t be trusted with the future of the programs. Republicans have promised to not make cuts to either program as part of talks to raise the debt ceiling.
However, bipartisan talks separate exploring potential reforms to protect Social Security have seen some pick-up in the past few months, separate from the ongoing discussions over how to address the debt ceiling, which caps how much money the Treasury can borrow to pay the government’s bills.
Lawmakers on both sides say they plan to pay close attention to Biden’s proposed spending levels for defense, as the Pentagon budget has seen some scrutiny from Republicans this year.
As Republicans ramp up calls for spending cuts in exchange for their help to raise the debt limit, the party has also seen clashes amongst its own members over where defense dollars should factor into talks amid calls from some conservatives to trim military spending in certain areas.
At the same time, Senate Minority Leader Mitch McConnell (R-Ky.) has called for “substantial” increases to defense spending. Other Republicans have also stepped up pressure on Biden for what they have described as sufficient increases to the Pentagon.
Pressed on what he’s watching for in Biden’s budget, Sen. Lindsey Graham (R-S.C.) told The Hill he’s “looking forward to seeing” what the president proposes for military spending, but he also said he thinks it will “be woefully inadequate to the threats we face.”
However, as House Republicans have struggled to unify behind a strategy in debt limit conversations, some Democrats say they see an opportunity for negotiations for domestic spending on the Senate side.
Sen. Sheldon Whitehouse (D-R.I.), chair of the Senate Budget Committee, told reporters on Tuesday that he expects Republicans to “seek to add to the defense side” once Biden’s budget comes out.
And, in response, he said “the Democrats [will] seek to maintain parity and negotiating happens.”
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