• Thu. Dec 8th, 2022

Biden to announce draft budget, tax hike on wealthy expected

ByDebra J. Aguilar

Mar 28, 2022

WASHINGTON (AP) — President Joe Biden released a draft budget on Monday that calls for higher taxes for the wealthy, lower federal deficits, more money for police and increased funding for the education, public health and housing.

Essentially, he’s trying to tell voters what a diverse and sometimes fractured Democratic Party stands for.

Bottom line: Biden is proposing a total of $5.8 trillion in federal spending for fiscal year 2023, which begins in October, slightly less than what was expected to be spent this year before the spending bill additional ones are enacted this month. The deficit would be $1.15 trillion.

There would be $795 billion for defense, $915 billion for national programs, and the balance would go to mandatory spending such as Social Security, Medicare, Medicaid, and net interest on the national debt.

The higher taxes outlined Monday would generate $361 billion in revenue over 10 years and apply to the top 0.01% of households. The proposal lists an additional $1.4 trillion in revenue generated over the next decade from other tax changes.

The 156-page plan also shows the shards that persist in Biden’s coalition and the possible gaps between the promises of what’s on offer and the realities of what ultimately emerges.

The proposal includes a 20% minimum tax on household income worth $100 million or more, similar to a proposal Democrats in Congress began debating late last year.

More money would go to supporting law enforcement, but bipartisan police reform efforts have failed. The budget assumes – with a high degree of uncertainty based on forecasts made last November – that inflation at a 40-year high will return to normal next year.

“Budgets are statements of values,” Biden said in a statement, “and the budget I release today sends a clear message that we value fiscal responsibility, safety and security at home and around the world, and the investments necessary to continue our equitable action”. growth and building a better America.

It’s a pitch for the midterm elections in a nation still unbalanced after a few chaotic years caused by the pandemic, an economic recession, a recovery, challenges to American democracy and the war in Ukraine. The Biden budget plans to cut annual deficits by more than $1 trillion over the next decade. Those cuts would come largely through higher taxes and the expiration of relief spending related to the coronavirus outbreak that began in 2020.

While the budget would increase funding for education, public health and provide $48 billion to increase the supply of affordable housing, it does not specify what the broader successor to the stalled ‘Build Back Better’ program would be. of Biden. This proposal from last year included money for child care, preschool, clean energy and reduced health care premiums, but was blocked by Sen. Joe Manchin of Virginia- Western, the decisive Democratic vote.

White House Budget Director Shalanda Young told reporters the plan did not include items related to this possible bill because “discussions with Congress are ongoing.” But the budget plan includes a “deficit-neutral reserve fund” to account for a possible deal.

The Biden administration last year considered a tax hike that looks like the minimum 20% on total income for people worth $100 million or more. But Manchin rejected this idea. What the Biden administration outlined on Monday would raise $361 billion over 10 years and would apply to the top 0.01% of households. The proposal lists an additional $1.4 trillion in revenue generated over the next decade from other tax changes.

Among the tax changes are a corporate tax rate of 28% and a top individual rate of 39.6%, both increases.

The plan is based on a forecast that the economy will return to normal next year after unprecedented pandemic and inflation-related spending. The budget projects inflation of 4.7% this year and 2.3% in 2023, up from 7% in 2021. Yet prices have continued to climb in the first two months of 2022 and the invasion of Ukraine by Russia has driven up the prices of oil, gasoline and natural gas in ways that could spread to the entire economy.

Cecilia Rouse, chair of the White House Council of Economic Advisers, said the administration expects “the economy to normalize” as the country weathers the waves of the pandemic, pressures on the chain of supplies are easing and the “extraordinary measures” of support linked to the off-budget coronavirus roll. This normalization would imply inflation returning to its most typical levels, “but there is huge uncertainty,” Rouse said.

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