WASHINGTON (AP) – President Joe Biden’s upcoming budget proposal aims to cut deficits by nearly USD3 trillion over the next decade, the White House said on Wednesday.
That deficit reduction goal is significantly higher than the USD2 trillion that Biden had promised in his State of the Union address last month. It also is a sharp contrast with House Republicans, who have called for a path to a balanced budget but have yet to offer a blueprint.
The White House has consistently called into question Republicans’ commitment to what it considers a sustainable federal budget. Administration officials have noted that the various tax plans and other policies previously backed by GOP lawmakers would add roughly USD3 trillion to the national debt over 10 years.
“This is something we think is important,” White House press secretary Karine Jean-Pierre said about the plan Biden intends to discuss.
“This is something that shows the American people that we take this seriously.”
As part of the budget, the president already has said he wants to increase the Medicare payroll tax on people making more than USD400,000 per year and impose a tax on the holdings of billionaires and others with extreme degrees of wealth.
The proposal would seek to close the “carried interest” loophole that allows wealthy hedge fund managers and other to pay their taxes at a lower rate, and would prevent billionaires from being able to set aside large amounts of their holdings in tax-favoured retirement accounts, according to an administration official. The plan also projects saving USD24 billion over 10 years by removing a tax subsidy for cryptocurrency transactions.
It’s a delicate time with the US economy on edge because of high inflation. The government this summer is likely to exhaust its emergency measures to keep Washington running, setting up the risk of a default on payments along with cataclysmic series of job losses that could crash the economy.
Biden’s package of spending priorities is unlikely to pass the House or Senate as proposed.
Senate Minority Leader Mitch McConnell, R-Ky, said on Tuesday that the plan “will not see the light of day”, a sign that it might primarily serve as a messaging document going into the 2024 elections.
Rohit Kumar, a former McConnell aide who is now an executive with the tax consultancy PwC, said Biden’s plan does matter “in terms of putting ideas out there”.
He said that if Biden won a second term, elements of this spending blueprint could be part of negotiations in 2025 about the expiring provisions in the 2017 tax cuts that president Donald Trump signed into law.
Given the scope of the deficit reduction in Biden’s proposal, Kumar said it was unlikely that the president’s plan would identify which parts of the expiring tax cuts he plans to keep, as the president has vowed no tax increases on anyone making less than USD400,000.
But while the White House has charged that Republican plans increase deficits by USD3 trillion, about USD2.7 trillion of that total comes from renewing all the Trump-era tax cuts that disproportionately favoured the wealthy.
