Topline
President Joe Biden on Monday released a $5.8 trillion budget proposal for the upcoming fiscal year packed with Democratic legislative priorities such as affordable housing and healthcare, in addition to what could be the nation’s first tax targeting billionaire wealth—setting the stage for months of negotiations as Congress works to approve a final spending package.
Key Facts
Released on Monday, the 156-page plan proposes a record $813.3 billion in defense-related spending (up 10% from last year’s enacted level), another $770 billion in additional discretionary spending, and about $3.7 trillion for mandatory programs including Social Security ($1.3 trillion), Medicare ($853 billion) and Medicaid ($567 billion).
Big-ticket items include $50 billion to construct affordable housing, $10 billion to help expand the staff at the Centers for Disease Control and Prevention, and $10 billion for state and local election officials to help increase staffing and support mail-in voting.
In addition to $30 billion in ongoing spending for law enforcement, the budget allocates $3.2 billion in grants to help state and local governments hire more police officers, and another $1.7 billion to support staffing for the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
Headlining a slew of new tax measures, the president proposes a minimum tax rate of 20% targeting the highest-earning Americans, which would raise an estimated $361 billion over the next decade with more than half the revenue coming from billionaires alone.
The budget would also raise the corporate income tax rate from 21% to 28%, eliminate preferential tax treatment for fossil fuel transactions and introduce measures to help prevent multinationals operating in the U.S. from using tax havens abroad to undercut the global minimum tax.
The White House says the tax measures—marking what would be the largest tax hike ever—will help Biden’s budget reduce the nation’s deficit by $1.3 trillion, but the Congressional Budget Office has yet to release its independent assessment of the proposal.
What To Watch For
According to the Center on Budget and Policy Priorities, the president’s budget proposal is only a recommendation to Congress about how it should appropriate funds for the upcoming fiscal year. Lawmakers are supposed to pass a budget resolution outlining expected spending by April 15 and then have until October 1 to approve a final budget or a stopgap measure extending funding at current levels.
Key Background
Congress failed to pass a budget for the fiscal year by the end of last September, forcing lawmakers to pass a series of temporary measures to avoid a government shutdown until lawmakers finally struck a deal and passed a measure this month. Amid the negotiations, many measures originally included in Biden’s proposed budget were ultimately rejected, including four years of free college education and universal family and medical leave. However, others made it into separate pieces of legislation, such as the Bipartisan Infrastructure Law signed into law in November. With an evenly split Senate and moderate Democrats hesitant over heightened spending, it’s unclear how much of Biden’s proposal can ultimately clear Congress.
Big Number
$44.8 trillion. That’s how much federal debt the White House projects under Biden’s plan by 2032, more than $15 trillion above current levels.
Chief Critic
“The President’s budget surrenders America’s energy independence and attacks American energy companies so that we are more reliant on foreign nations for our energy needs,” House Budget Ranking Member Jason Smith (R-Mo.) said in a statement on Monday. “What this budget shows is that President Biden values more spending, more debt, more taxes, and more pain for the American people.”
Further Reading
Biden’s Billionaire Tax Unveiled: What We Know About The Proposed Tax On America’s Richest 0.01% (Forbes)