Biden Unveils $6.8 Trillion Budget With New Tax Revenue

Topline

President Joe Biden proposed new taxes on the wealthy in order to lower the federal deficit by $3 trillion over the next five years in his 2024 budget plan unveiled Thursday—but the proposal is expected to face a long negotiating process in Congress, where House Republicans have vowed to drastically reduce federal spending.

U.S. President Joe Biden speaks during the 2023 International Association of Fire Fighters … [+] Legislative Conference in Washington, D.C, on March 6, 2023.

SAUL LOEB/AFP via Getty Images

Key Facts

The $6.8 trillion 2024 spending plan includes $885 billion in defense spending and $1 trillion in non-defense spending, not including mandatory programs like Medicare and Social Security, and aims to reduce the federal deficit by $3 trillion over the next ten years.

The Biden Administration has said that fortifying a key Medicare fund that could run out of money by 2028 is a key priority in this year’s budget—it hopes to achieve that, in part, by imposing a “modest” raise, from 3.8% to 5%, on Medicare surtaxes for those who make more than $400,000 a year.

The plan also includes Biden’s promised “billionaires tax,” which would establish a minimum 25% rate for households earning above $100 million and include taxes on unrealized capital gains (without taxes on those assets, the White House estimates those earners pay about 8%).

In total, the proposal includes $5 trillion in new revenue from taxes over the next 10 years.

Biden’s proposal faces long odds of passing the Republican-controlled House without significant changes—the GOP has already expressed plans to drastically reduce federal spending on foreign aid, healthcare and housing programs, and members are likely prepping public rebukes of the White House budget as soon as it’s released.

With a slim 222-218 majority in the House, Speaker Kevin McCarthy (R-Calif.) must find a way to appease nearly all of his members to approve a budget plan, while also negotiating with Democrats who control the Senate, in order to pass the legislation before the end of September.

The proposal is also expected to serve as a precursor for a would-be reelection campaign that runs parallel to Biden’s political messaging strategy.

What To Watch For

Biden will deliver a speech on the plan Thursday afternoon in Pennsylvania, outside of the usual White House setting, marking his 23rd appearance in the battleground state he won by just one point in 2020—the latest sign he is gearing up for a reelection run.

Key Background

Congress must pass a new budget before the conclusion of every federal fiscal year at the end of September. Oftentimes, lawmakers will approve a temporary extension of the current fiscal year budget, as they did at the end of the last fiscal year and again in December, to avert a government shutdown. On December 29, Biden signed into law the $1.7 trillion 2023 fiscal year plan the federal government is currently operating under. That legislation included a 10% increase on defense spending and a 6% increase on all other types of spending, including an additional $45 billion in funding for Ukraine and $15.3 billion for earmarks given to lawmakers for projects in their home districts.

Contra

Republicans are poised to take a scalpel to federal programs in their version of the 2024 spending plan set to be released in the coming months. Emboldened by the concessions McCarthy granted them in his hard-fought speaker election, hard-right conservatives are expected to demand cuts to the FBI’s counterintelligence programs, reductions in Obamacare expansions and rollbacks of federal housing programs, The New York Times reported, citing a strategy written by former Trump budget director Russell Vought, whose plan Republicans are reportedly relying on to craft their own. The budgetary concessions McCarthy agreed to in his speakership bid include reducing federal spending to fiscal year 2022 levels and casting separate votes on all 12 pieces of legislation that make up the annual spending package. Medicare and Social Security cuts, however, are off the table, Republicans have vowed.

Crucial Quote

“There is going to be a gnashing of teeth,” Rep. Ralph Norman (R-S.C.) told The Times. “It is not going to be a pretty process. But that’s how it should be.”

Biden Unveils $6.8 Trillion Budget With New Tax Revenue—Here’s What To Know