Biden proposes social programs and more taxes on the rich – 09/03/2023 – Market

US President Joe Biden on Thursday proposed a $6.8 trillion budget that seeks to increase spending on the military and a wide range of new social programs, while reducing future budget deficits, defying the calls from Republicans to reduce the size of government and reaffirm their economic vision, ahead of their expected re-election campaign.

The budget incorporates about $5 trillion in proposed tax increases on high earners and businesses over the next 10 years, in large part to offset new spending programs designed to benefit the middle class and poor. The proposal seeks to reduce budget deficits by nearly $3 trillion over that period compared to the country’s current trajectory.

The budget reaffirms Biden’s arguments that he will be able to prevent a growing debt burden from weighing on the economy, while expanding spending and protecting programs to protect the poorest – all of which is funded almost entirely by increases in the budget. taxes on the richest and corporations.

“This president clearly believes that the way to grow the economy is to invest in the middle class and working families,” Shalanda Young, the director of the White House budget service, told reporters on Thursday. “No matter what the circumstances, our plan will always respect fiscal responsibility.”

But after claiming credit for a $1.7 trillion drop in the annual deficit over the past year, Biden is now forecasting a further widening of the deficit in fiscal 2024, to $1.8 trillion. The jump is bigger than predicted by other analysts, such as the Congressional Budget Service. It is driven by rising costs of servicing the national debt now that the Federal Reserve (Fed), the US central bank, is raising interest rates to contain inflation, and by new programs that the president is proposing and whose costs will not be fully covered by tax increases in your first year.

The plan would inevitably draw immediate criticism from Republicans, who are locked in an economically dangerous debate with Biden over the national debt limit, which House conservatives refuse to raise unless the president accepts steep spending cuts. The proposals are unlikely to pass because Republicans won control of the House in November.

Instead, Biden’s budget proposal is a political statement of values ​​designed to win over public opinion, amid the fight over expanding the debt limit and the first steps of the 2024 presidential campaign. Biden would announce the proposal in a speech in Philadelphia on Thursday afternoon – the metropolis of a state whose political control will be up for grabs next year.

“The budget reflects our values ​​as a nation – a nation of good people, growing into a new era of possibility, and standing as a beacon to the world,” Biden wrote in the introduction to the document. “Let’s, together, put these values ​​into practice and prove that democracy works as we continue to build a stronger, fairer economy that leaves no one behind.”

The proposals demonstrate Biden’s early success in expanding the federal government’s role in the economy, and reaffirm his determination to do more. On Biden’s watch, the numbers show that domestic spending in areas such as research and industry support grew significantly more, as a proportion of the economy, than was forecast in the budget proposals of the previous Democratic administration, that of Barack Obama, of whom Biden was vice president.

In his first two years as president, Biden signed legislation to expand and rebuild essential infrastructure elements like aqueducts and highways, bolster the manufacturing of semiconductors and other high-tech goods in the United States, and accelerate the transition from fossil fuels to energy sources. energy with low pollutant emissions in order to combat climate change. He provided military assistance to Ukraine in its war with Russia and signed a bipartisan bill that would expand federal medical care for military veterans exposed to toxic burns.

But the president has had to leave much of his economic agenda unfinished, a fact reflected in his budget, which has renewed calls for programs that failed when his party controlled Congress.

The president’s budget proposed $400 billion to provide affordable child care for families, $150 billion for home care for older and disabled Americans, and nearly $400 billion to make permanent the expanded health coverage provided. by the Access to Health Act. It would set aside $325 billion to guarantee paid leave for workers and about $300 billion combined to fund free higher education and free preschool education. He proposes $100 billion in additional assistance to reduce housing costs for homebuyers and tenants.

Biden would reinstate for three additional years the expanded tax credit for families with young children, which was part of the economic assistance law he signed in 2021 but expired last year, as a way to reduce child poverty. It would make permanent a change to the credit that would allow people to benefit fully from it even if they don’t have enough income to be subject to federal income tax. Together, the changes would cost more than $400 billion.

To help offset the costs, Biden has proposed a series of tax increases on corporations and the richest Americans. These include a 25% tax aimed at billionaires (he proposed a similar tax last year, but at a lower rate: 20%). He also proposed quadrupling the tax on share buybacks and renewed his call for a reduction in President Donald Trump’s tax cuts to benefit high-income earners, and to raise the corporate income tax rate from 21% to 28%. .

Biden has proposed raising and expanding a tax on Americans earning more than $400,000 a year as part of efforts to keep the federal health care program Medicare solvent for another quarter century. He also proposes new cost cuts for the government based on more aggressive negotiation on prescription drug prices.

But for the third consecutive budget, Biden has not proposed any new initiatives to extend Social Security solvency – contrary to what he stated in the 2020 campaign, when he proposed expanding the benefits and strengthening the program’s trust fund, increasing wage tax rates. on people earning more than US$400,000 a year.

Biden predicts that the gross national debt will increase by about $18 trillion through 2033, rising to just over $50 trillion. But his budget suggests that debt growth does not threaten the economy.

“The economic debt burden would remain low and in line with recent historical experience over the next decade,” government officials wrote in the budget proposal.

Much of the budget’s content consists of retakes from previous Biden proposals. But it also includes some new proposals. One is a tax on the energy used to create new digital currency assets, an activity known as cryptocurrency mining. This practice requires high electricity consumption and generates emissions that contribute to climate change.

Government representatives want to discourage the practice, which they say hampers the country’s energy transition. So they proposed a 30% tax on electricity used for this purpose, gradually adopted over three years, and it doesn’t matter if the electricity comes from a power company or from a localized source, such as a domestic solar panel, based on on the theory that the energy involved would be better used elsewhere.

_{The New York Times, translated by Paulo Migliacci}