US President Joe Biden calls for higher taxes on the rich to help fund his proposed budget
Philadelphia (AFP) - President Joe Biden presented what amounts to his 2024 reelection pitch on the US economy Thursday, with a proposed budget slapping new taxes on the rich, while touting assistance for blue collar Americans.
“My budget reflects what we can do to lift the burden on hard-working Americans,” Biden said in a speech at a trade union hall in Philadelphia. “My budget plan is going to give people a fighting chance.”
The details released by the White House threw down the gauntlet to Republicans as the president builds to an expected reelection campaign announcement.
Congressional Republicans will certainly block most of Biden’s proposals, arguing that spending cuts, not tax raises, are the solution to resolving the nation’s ballooning debt.
However, they are now under pressure to explain where they would reduce spending. Democrats, meanwhile, are trying to seize the populist high ground by framing themselves as the party of ordinary Americans.
“Too many people have been left behind and treated like they’re invisible. Not anymore. I promise you: I see you,” Biden said, addressing blue collar voters in language that echoed his Republican predecessor Donald Trump.
Main points in Biden’s budget proposal include a pledge to slash the federal deficit by $3 trillion over the next decade.
Among measures achieving that would be a minimum 25 percent tax on the wealthiest 0.01 percent of Americans.
“No billionaire should paying a lower tax than somebody working as a school teacher or a firefighter,” Biden said.
A major change would be raising the corporate tax to 28 percent, reversing a huge tax cut enacted under Trump in 2017, the White House said. Trump brought in a 21 percent rate, down from 35 percent, but the effective rate actually paid by corporations, according to government figures, is currently less than 10 percent.
Biden is also proposing to raise taxes on those earning more than $400,000 a year to ensure that Medicare – the hugely popular, but increasingly strained government health insurance system for people over 65 – remains solvent.
Hiking the Medicare tax from 3.8 to 5.0 percent for those wealthy individuals would ensure the program’s viability for more than two decades, the White House says.
- Populist pitch -
Most of Biden’s proposed budget is basically an opening shot in difficult negotiations to come in Congress, where Republicans have a narrow majority in the House of Representatives and Democrats have a slim hold on the Senate.
It’s the “start of a healthy dialogue,” said Shalanda Young, director of the Office of Management and Budget.
Republicans have rejected voting for any tax increases, saying Biden is pushing out-of-control spending and anti-business policies.
“President Biden has submitted a budget proposal that is wasteful, unserious, and behind schedule,” Republican Senator Bill Hagerty said.
Earlier this week, top Senate Republican Mitch McConnell vowed that “massive tax increases, more spending… will not see the light of day.”
However, Biden’s gambit is that by laying out a deficit-cutting plan funded by the very wealthy he can look fiscally responsible and in touch with middle-class voters at the same time.
One item Republicans will have a harder time arguing with is a request for record defense spending at $842 billion in 2024, a 3.2 percent increase.
And the battle of narratives is due to meet a very real test within months.
The US Treasury has effectively already run out of money for this year, after maxing out the previously authorized $31.4 trillion borrowing limit. It needs Congress urgently to approve taking on extra debt or risk plunging the world’s biggest economy into severe tensions – and potential debt default.
That doomsday scenario could kick in as early as July, the Congressional Budget Office said in February.
Republicans say the ever-growing federal debt points to the need for slashing spending, but Democrats say Republicans are using the issue as a way to weaken Medicare and other long-popular programs, while shielding the rich from taxes.
Biden indicated he’s ready to negotiate but first wants to see the Republicans’ version of the budget from House Speaker Kevin McCarthy.
“I’m ready to meet with the speaker any time – tomorrow if he has his budget,” he said.