Biden calls for broad new social programs, higher taxes on corporations and the wealthy

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correction

An earlier version of this article gave the wrong total for the budget proposal. It is $7.3 trillion, not $7.2 trillion. The article has been corrected.

President Biden called for major new spending initiatives Monday to lower costs for health care, child care and housing, and enough new taxes on the wealthy and major corporations to pay for those proposals and also shave $3 trillion off the national debt over the next decade.

Biden’s reelection year budget lays out the broad policy planks that many leading liberals have pushed him to embrace as he campaigns for another four years in the White House. With Republicans in control of the House, the proposals stand almost no chance of becoming law, but they set the stage for a likely rematch with former president Donald Trump this fall.

In a $7.3 trillion budget for fiscal 2025, Biden would have Congress offer universal prekindergarten education, provide 12 weeks of paid family and medical leave, expand anti-poverty tax credits and create a new tax break for first-time home buyers.

The vast majority of the budget would cover mandatory programs, such as Medicare, Medicaid, Social Security and veterans’ benefits, which are not subject to annual spending legislation.

That spending would be more than offset by dramatically increasing taxes on the wealthiest individuals and corporations, the White House said. Biden’s budget would increase the minimum tax on billion-dollar corporations to 21 percent from 15 percent. It would raise taxes on U.S. multinationals’ foreign income to 21 percent from 10.5 percent, and eliminate some tax deductions for executive compensation.

It would also bolster funding for the Internal Revenue Service to train additional scrutiny on those same individuals and businesses. Biden’s budget would grant the agency an additional $104.3 billion — on top of an existing $60 billion expansion from the 2022 Inflation Reduction Act — over the next decade. Administration officials said that would generate $341 billion in net revenue, a nearly three-to-one return on investment ratio.

That proposal, in particular, might face long odds: Republicans have chafed at Biden’s expansion of the IRS, which he has used as the engine of much of his social programming and as a populist lever to discuss economic fairness and wealth concentration. GOP lawmakers already clawed back $20 billion of what was supposed to be $80 billion in funding for the tax service from the 2022 law in recent spending fights.

The administration has demonstrated its willing to negotiate with Republicans over that extra money already, before even asking for the additional $104 billion.

Aides portrayed the budget as a continuation of Biden’s policies.

“It’s clear the president’s economic strategy of building the economy from the middle out and bottom up is working,” Shalanda Young, director of the White House’s Office of Management and Budget, told reporters Monday.

The budget follows up the president’s State of the Union address, which fired up Democrats and ignited the Biden campaign’s largest fundraising hauls, in the strongest signal yet of Biden’s ambitions should he win another four years in the White House.

In the speech, Biden spoke of “building a future of American possibilities” in what some in Congress called the most sweeping social agenda since President Lyndon B. Johnson’s “Great Society.”

“Imagine what that could do for America,” Biden said in the address. “Imagine a future with affordable child care. Millions of families can get — they need to go to work to help grow the economy. Imagine a future with paid leave because no one should have to choose between working and taking care of a sick family member. Imagine a future of home care and elder care and people living with disabilities so they can stay in their homes and family caregivers can finally get the pay they deserve.”

The budget is similar to the proposal Biden made last year and echoes pushes he made during negotiations on his defunct Build Back Better Act. But in some cases, Biden wasn’t able to win policies the budget calls for, even when Democrats controlled both chambers of Congress. Instead, the party scaled back some of its ambitions to pass the 2022 Inflation Reduction Act, one of the president’s chief legislative victories.

That legislation capped the cost of insulin at $35 per month for seniors who use Medicare. Biden’s budget calls for expanding that price cap to the commercial market, and allowing Medicare to negotiate more aggressively to bring down the cost of other drugs, though manufacturers have sued to block such price negotiations.

Biden would also restore expansions of the child tax credit, part of his 2021 American Rescue Plan Act. That measure sent monthly checks to working families to offset the cost of child care and kept 3 million children out of poverty, according to research conducted by Columbia University’s Center on Poverty and Social Policy.

The provisions expired at the end of 2021, and Congress is considering a modest expansion of the child tax credit that would broaden eligibility for the lowest-income families with multiple children.

Biden instead would reinstate larger monthly payments to more participants, at a cost of $310 billion from 2025 through 2034.

“The child tax credit I passed during the pandemic cut taxes for millions of working families and cut child poverty in half,” Biden said in his State of the Union. “Restore that child tax credit. No child should go hungry in this country.”

Republicans in Washington have already shot down some of Biden’s proposals. Rep. Jason T. Smith (R-Mo.), chair of the powerful House Ways and Means Committee, called Biden’s home buyers’ tax credit a “mortgage-worsening tax credit.”

“The president’s proposal is an admission that mortgage rates are too high,” Smith said Sunday in a statement. “ … Unfortunately, this misguided response to the interest rate crisis the President created will do nothing to lower the cost of mortgages, will actually drive up the cost further of trying to own home, and may result in triggering another financial crisis.”

Biden’s administration has been dogged by persistent inflation, though that’s begun to cool in recent months. Prices rose 3.1 percent in January compared with the year before, a slower increase than 2023′s 3.4 percent annual rate — and far below the post-covid and 40-year peak of 9.1 percent — but still higher than analysts expected.

Conservatives argue that more government spending, and more social programs, will drive up inflation even more by injecting money into the economy.

Biden’s top economic advisers rejected that claim Wednesday, saying instead that investments in affordable child care and eldercare would give more individuals opportunity to join the workforce. That would drive up wages and give consumers more buying, relieving inflation.

“We’re very confident that if more caregivers could afford to pay for child care … that would increase labor force,” Jared Bernstein, chair of Biden’s Council of Economic Advisers, told reporters. “Higher labor force is very much a pro-growth development. It’s also helpful in dampening inflationary pressures.”

Congress has yet to finish passing spending laws to deal with the current fiscal year, which began Oct. 1, 2023, and runs until Sept. 30. Biden’s budget would cover the next year, starting Oct. 1.

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