Biden’s 2024 Budget Will Focus On ‘Billionaires Tax’ And Lowering The Deficit By $3 Trillion: Here’s What To Know

Topline

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

Key Facts

Biden has vowed to reduce the federal deficit by $3 trillion over the next 10 years and fortify a key Medicare fund that is under threat of running out of money in 2028.

In order to do that, the White House said it will propose what it calls a “modest” raise, from 3.8% to 5%, on Medicare surtaxes for those who make more than $400,000 a year.

The plan is also expected to fulfill Biden’s promise to impose a “billionaire’s tax,” which would establish a minimum 20% rate for households earning above $100 million, compared to the typical 8% tax rate the White House says those earners currently pay.

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, health care 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, 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 re-election campaign that runs parallel to Biden’s political messaging strategy.

What To Watch For

Biden will unveil the plan on Thursday 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 re-election run.

Tangent

Defense spending, which reached a record high of $858 billion in the fiscal year 2023 budget, is slated for another increase in Biden’s proposal, Pentagon Comptroller Michael McCord told Politico. Federal employees would also see a 5.2% increase in pay, the largest jump in 43 years under Biden’s plan, the Washington Post reported Wednesday, citing a senior federal official who spoke under the condition of anonymity.

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 year 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 House Speaker Kevin McCarthy (R-Calif.) granted them in his hard-fought speaker election, far-right conservatives are expected to demand cuts to the F.B.I.’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. Among the budgetary concessions McCarthy agreed to in his speakership bid, is 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.”

Further Reading

Biden Proposes Taxing Higher Income Earners To Help Save Medicare (Forbes)

Senate Passes Stopgap Funding Bill, Averting Government Shutdown (Forbes)

Senate Passes $1.7 Trillion Budget Bill–Here Are Some Of The Most Notable Items, Including Money For Sanctuary Cities And $15 Billion In Earmarks (Forbes)