President Biden on Monday released his 2025 budget proposal asking for an eye-popping $7.3 trillion in government spending, but he pledged to reduce the debt by convincing Congress to soak the rich and corporations with massive tax increases.
The president’s budget calls for reducing the deficit while also spending roughly $3 trillion on new policy initiatives paid for with more than $5.4 trillion in new revenue raised through hefty tax hikes on billionaires and large corporations and lower government spending on prescription drugs.
Still, the blueprint envisions a massive increase in the role of the federal government, shooting for about $10.3 trillion in annual spending by 2033, up from current spending totals of $6.3 trillion.
Mr. Biden, in his budget message to Congress, said he helped manage the country through the end of the pandemic and now it’s time for the government to move from crisis containment to active investment.
“We are the only nation that has emerged from every crisis we have entered stronger than we went in,” the president said. “While my Administration has seen great progress since day one, there is still work to do. My Budget will help make that promise real.”
Nearly every single Cabinet-level agency would receive a budget increase, with some budgets increasing by as much as 7.5%. Only the Department of Veterans Affairs and the Department of Transportation would receive spending cuts.
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The Biden budget for fiscal year 2025, which begins Oct. 1, includes revives many of the spending plans Mr. Biden unveiled at the outset of his administration, but scaled back because of opposition in Congress. That includes trillions in new spending on programs such as child care, college costs, and public housing.
Universal prekindergarten education, 12 weeks of paid family and medical leave, an expansion of anti-poverty tax credits and a new tax break for first-time home buyers are among Mr. Biden’s budget requests.
Mr. Biden is seeking $12 billion to create a fund aimed at lowering the cost of college for students, and more than $30 billion the administration says will lower the cost of housing.
Mr. Biden’s budget aims to reduce the deficit by $3 trillion over the next 10 years, largely by imposing a minimum 25% tax rate on the unrealized income of very wealthy households and raising the corporate tax code.
Other dramatic tax increases include raising the minimum tax on billion-dollar corporations to 21% from 15%, raising taxes on U.S. corporations’ foreign income to 21% from 10.5% and eliminating corporate tax reductions for executive compensation.
The president wants to restore the $20 billion in new funding to the Internal Revenue Service, money Congressional Republicans were able to cut in recent spending fights. That money, according to the budget, would go to training new agents to scrutinize the wealthy and corporations.
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House Republican leaders, including Speaker Mike Johnson of Louisiana, said Mr. Biden’s budget reflects his “insatiable appetite for reckless spending.”
“While hard-working Americans struggle with crushing inflation and mounting national debt, the President would increase their pain to spend trillions of additional taxpayer dollars to advance his left-wing agenda,” they said in a joint statement.
Mr. Biden’s proposal comes in the middle of what’s expected to be a tough election rematch with former President Trump. His reelection effort has been dogged by poor polling that shows viewers have a dim view of Mr. Biden’s handling of the economy.
With his budget, Mr. Biden forecasts that more government spending on social programs will not raise inflation, as economists have warned.
Jared Bernstein, a top economic adviser to the president, told reporters that more spending on social programs would empower more individuals to join the workforce, driving wages up and reducing inflation.
“We’re very confident that if more caregivers could afford to pay for child care … that would increase the labor force,” he said. “It’s also helpful in dampening inflationary pressures.”
As an actual blueprint for government spending, Mr. Biden’s budget is close to meaningless. It’s weeks late, and it will have little effect on Congress, the branch of government that has primary control over spending.
Indeed, the GOP-led House’s Budget Committee has already written and passed a budget for fiscal year 2025, envisioning significant spending cuts and none of the tax increases Mr. Biden wants to see. Republicans call for total spending of $6.5 trillion and $5 trillion in revenue, leaving a deficit of $1.5 trillion for next year.
That’s roughly $500 billion less in taxes and $800 billion less in spending than Mr. Biden’s plan.
Over the coming decade, Republicans say their budget would reduce deficits each year, most of that by limiting the growth of Medicare and Medicaid spending, finally resulting in an annual surplus in 2034.
Given the party split between the House and Senate, it’s unfathomable that Congress agrees on a full budget. The more likely outcome is the two sides agree on overall spending levels and then leave it to the spending committees to divvy the money up.
Shalanda Young, the White House Office of Management and Budget director, told reporters that the Republican plan is too vague to be taken seriously.
“They don’t tell you what they want to cut, who they harm,” she said. “Congressional Republicans gave us a top line that has rosy projections.”
The Biden budget would also cover entitlement programs such as Medicare, Medicaid, Social Security and veterans’ benefits. However, Mr. Biden doesn’t say how he’d shore up entitlement programs, beyond promising not to raise taxes on the middle class or cut benefits, which suggests raising taxes on the rich and corporations.
The proposal also calls for $8 billion over the next decade to fund one of Mr. Biden’s pet climate projects, the American Climate Corps, which provides training for green jobs. As part of that $8 billion, Mr. Biden wants $125 million to triple its workforce by hiring 50,000 new workers annually by 2031.
He also requested $3 billion for a program that helps other countries fight climate change.