White House budget blueprint would raise taxes, boost spending

WASHINGTON — President Joe Biden unveiled a $6.9 trillion budget blueprint Thursday that promises to cut projected deficits and safeguard cherished entitlement programs for seniors as he confronts a new Republican-controlled House for the first time in his presidency.

The fiscal 2024 budget request proposes a slew of new spending designed to increase child care, build affordable housing, reduce home energy bills, make college more affordable and more. But it relies more heavily on tax increases for upper-income households to pay for those programs while trying to tame rising deficits.

The plan calls for imposing a 25% minimum tax on the wealthiest 0.01% of households, quadrupling a 1% surcharge on corporate stock buybacks, restoring the top marginal income tax rate to 39.6%, and raising the corporate income tax rate from 21% to 28%, among other things.

And it promises to extend the solvency of Medicare by a quarter-century by raising Medicare taxes on those making more than $400,000 a year and expanding the authority for Medicare to negotiate prices with drug manufacturers.

While spending would increase by $1.9 trillion over a decade, revenue would increase by $4.7 trillion, for over $2.8 trillion in 10-year deficit reduction. But according to the Office of Management and Budget’s numbers, the budget shortfall would still total more than $17 trillion over the next decade even if Biden’s plans were fully implemented, which seems unlikely.

The deficit would grow from nearly $1.6 trillion this fiscal year to nearly $1.85 trillion next year. It would then gradually decline to $1.5 trillion in fiscal 2027 before inching back up, topping $2 trillion fiscal 2033.

The emphasis on fiscal discipline marks a shift in tone from his first budget proposal, issued two years ago, which offered up a spending spree designed to make up for what administration officials described at the time as a “decade of disinvestment” in domestic programs.

But Biden’s push for tax increases aimed at the wealthy sets the stage for a clash this year with Republican lawmakers who have already made clear their opposition.

“I do not believe raising taxes is the answer,” Speaker Kevin McCarthy, R-Calif., told reporters Wednesday. “I had this conversation with the president personally.”

Cecilia Rouse, outgoing chair of Biden’s Council of Economic Advisers, countered expected GOP criticism that tax increases in the budget would hurt economic growth. She told reporters in a conference call that the 2017 Republican tax cuts that favored upper-income households “really has had no impact that economists have been able to determine on economic growth. It’s been exaggerated.”

And it is not just a fight over tax policy. Another battle will be waged over discretionary spending priorities.

Republicans are pushing for more generous defense spending as concerns grow about a rising China and the war in Ukraine enters its second year.