Biden pitches $5.8 trillion plan with record tax hike
(Bloomberg) — President Joe Biden on Monday unveiled a $5.8 trillion budget request designed to appease moderate Democrats with a proposal for deficit reduction, additional funding for police and veterans, and new social spending. Emphasis was placed on the flexibility of negotiating the programmes.
Congress has historically set aside presidential budgets, but they form an important messaging tool. The White House included measures that would add up to the largest tax increase in history in dollar terms, helping stabilize the deficit relative to the size of the economy.
The 2023 budget calls for $1.598 trillion in so-called discretionary spending — sectors not linked to mandated programs like Social Security — with $813 billion for defense-related programs and $769 billion for household spending.
This marks a 5.7% increase from the omnibus spending bill for the 2022 fiscal year signed by Biden earlier this month. The budget will cut deficit spending by $1 trillion over the coming decade, fueled by the elimination of pandemic aid programs.
“We spent less money than in the previous administration and achieved better results: strong economic growth, which has increased revenue and allowed us to responsibly reduce emergency spending,” Biden said in a statement. “My budget will continue that progress, further reducing the deficit while continuing to support economic growth that has increased revenues and ensured that billionaires and large corporations pay their fair share.”
The president also shrugged off delicate talks over what remains of his “Build Back Better” agenda, putting only placeholder figures in the document, with White House officials acknowledging it was an attempt to give lawmakers room for dialogue.
The White House hopes Monday’s document could trigger talks with lawmakers such as Senator Joe Manchin of West Virginia and Kirsten Cinema of Arizona, who have raised concerns over historic spending levels and inflation.
Here are some major takeaways:
Biden’s budget forecasts were prepared ahead of the latest surge in inflation in November. Economic growth is projected to be 3.8 per cent this year, which will slow to 2% in the next decade. It assumes consumer prices will rise 4.7% this year, with inflation falling to 2.3% in 2023 as supply chain disruptions ease.
The forecasts appear unrealistic relative to private sector inflation and growth projections. White House officials said higher consumer-price hikes should not have a major impact on deficit expectations, however, noting that revenues will also be higher.
On top of the roughly $1.5 trillion increase included in House’s version of the Build Back Better plan, Biden is calling for more than $2.5 trillion in tax increases over a decade on wealthy and large corporations.
The proposal adds a 20% minimum tax on unrealized capital gains for households of at least $100 million, a political victory for progressives who are pushing Biden to target the mega-rich. The plan omitted a controversial bank-reporting proposal from last year that would allow financial institutions to share account information with the IRS.
If enacted in full, this year’s plan would be the largest tax increase in history, but it includes several major increases that have already been rejected by some Democrats in Congress. Biden again called for the corporate rate to be raised from 21% to 28%, and to raise rates on the highest-earning Americans to 39.6% – a move Sinema said she would not support. House Democrats also declined to include a version of the billionaires’ tax in last year’s social-spending bill.
The budget also omitted a proposal to expand the federal deduction for state and local taxes, or SALT. Several House Democrats have said that raising the $10,000 limit on valuable tax breaks is crucial to securing their vote on any legislation that would change the tax code.
Biden is calling for $813 billion in total defense spending for the coming year, with most of the money – $773 billion – going to the Pentagon, which the White House describes as “one of the largest investments in our national security in history”. describes in. ,
The request supports a 4.6% pay increase for US soldiers, a significant increase over previous years. The salary increase for this financial year is 2.7%. The administration is also requesting a 4.6% pay hike for government citizens.
Funding for the US Nuclear Triad and modernization programs, including nuclear command-and-control and communications networks. Northrop Grumman Corp’s B-21 bomber and the new Columbia-class submarine built by General Dynamics Corp. and Huntington Ingalls Industries Inc., are high-profile programs promoting the nuclear triad.
Under the White House blueprint, defense spending is projected to increase from $813 billion in FY2023 to $843 billion in FY2024 and $851 billion by 2025.
Many tax breaks cherished by oil and gas drillers will be repealed – even as the Biden administration pushes industry to produce more domestically at lower prices and help allies from Russian fossil fuels.
The tax break of about $43.6 billion will end in a decade, a move that is unlikely to pass Congress. Among them is intangible drilling cost reductions, which allow oil and gas companies to quickly deduct certain expenses such as labor, site preparation and repairs. Also eliminated: deduction for oil and gas production from marginal wells and a percentage reduction deduction that mineral rights owners can claim for a portion of the value of oil and gas reserves removed from their property.
The White House proposes a $200 million “solar manufacturing accelerator” to create a domestic solar manufacturing sector that is “capable of meeting the administration’s solar deployment goals without relying on imported goods manufactured using unacceptable labor practices.”
Biden is asking Congress to dedicate $11 billion in taxpayer dollars to help other countries deploy clean energy and cope with the growing consequences of climate change – 10 of the efforts made by lawmakers in fiscal 2022 times more than This will mark a major change. America after years of unfulfilled promises of climate funding for developing and vulnerable countries.
In all, Biden is seeking some $50 billion for programs to address climate change, including $18 billion to build US government resilience for a warming world, and ways to hire Americans. That includes at least $20 million for a new Citizens Climate Corps, as championed in Congress. Preventing wildfires, restoring wetlands and making homes more energy efficient.
— With assistance from Katya Dmitrieva, Roxana Tirone and Jennifer A. Dlouhy.