Mar 13, 2024
President Biden, who just secured the Democratic nomination for this year's election, revealed his massive $7.3 trillion budget proposal for fiscal year 2025 earlier this week. It calls for major tax hikes on the wealthy and corporations while raising spending for social programs and border security.
He also says his budget would slash the ongoing deficit by $3 trillion over the next decade.
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However, the proposal was met with significant pushback from Republicans, who promise to reduce the national deficit much faster with their own budget plan that includes cuts to spending in areas like green energy subsidies and student loan forgiveness while reducing taxes.
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“The price tag of President Biden’s proposed budget is yet another glaring reminder of this administration’s insatiable appetite for reckless spending and the Democrats’ disregard for fiscal responsibility,” House Speaker Mike Johnson, said in a statement.
“Biden’s budget doesn’t just miss the mark – it is a roadmap to accelerate America’s decline.”
A breakdown of the budget
Although some are slamming Biden’s request for increased spending on social programs, it also arrives at a time when middle-class America is being squeezed by ongoing inflation.
The White House says the budget will lower taxes for middle and low-income Americans by $765 billion over a decade. There are new proposed tax breaks for low- and middle-income Americans, like credits for first-time homebuyers and expanded assistance for people to buy health insurance.
The president wants to restore $80 billion in IRS funding, strengthen the finances of Medicare and Social Security, lower prescription drug prices and establish a national paid family and medical leave program, among other things.
However, the proposal also calls for $850 billion for the Defense Department and reiterates previous requests for continued aid to Ukraine and Israel and $11.8 billion in increased border security.
Some experts are also scrutinizing how exactly these programs will be paid for.
Chris Edwards of the libertarian thinktank Cato Institute estimated that the budget would add $17 trillion to government debt over the coming decade. "The Biden budget promises 'meaningful deficit reduction through measures that reduce wasteful spending' but does not deliver," he wrote.
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'Pay your fair share'
The White House says its proposals would be paid for in part by raising taxes on high-income Americans and corporations.
“I’m not anti-corporation,” Biden said, while speaking to New Hampshire. “I’m a capitalist, man. Make all the money you want. Just begin to pay your fair share in taxes.”
The corporate tax rate would be hiked to 28%, up from the 21% rate set by the 2017 Tax Cuts and Jobs Act during the Trump administration.
Folks earning more than $400,000 and married couples earning more than $450,00 a year would see the highest individual income tax rate reinstated to 39.6%. And individuals with wealth of over $100 million would be required to pay at least a quarter of their income to Uncle Sam.
The Biden administration also wants to deny tax deductions for employee compensation above $1 million, quadruple the stock buybacks tax to 4%, eliminate certain tax subsidies and crack down on tax avoidance by the wealthy and big corporations.
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
