UPDATED: 5:10 p.m.
WASHINGTON (Reuters) -U.S. President Joe Biden on Monday submitted a $5.79 trillion budget plan to Congress that calls for record peacetime military spending and further aid for Ukraine, while raising taxes for billionaires and companies and lowering government deficits.
Biden’s budget proposal for the 2023 fiscal year starting Oct. 1, lays out his administration’s priorities, including campaign promises to make the wealthy and companies pay more tax. It is merely a wish list as lawmakers on Capitol Hill make the final decisions on budget matters.
House Speaker Nancy Pelosi said Congress looked forward to working on Biden’s “bold fiscal blueprint.” Republicans and moderate Democrats killed similar tax proposals in the 2022 budget.
The plan was based on economic assumptions from November, well before Russia’s invasion of Ukraine, which has exacerbated previous inflationary pressures on energy and food prices, but Biden’s top economic adviser Cecilia Rouse said the administration still sees the U.S. economy strengthening and inflation easing over the coming year.
“The budget I am releasing today sends a clear message to the American people (about) what we value: first, fiscal responsibility, second, safety and security, and thirdly … the investments needed to build a better America,” Biden told reporters at the White House.
The Democratic president said he was calling for higher defense spending to strengthen the U.S. military and “forcefully respond to (Russian President Vladimir) Putin’s aggression against Ukraine” with $1 billion in additional U.S. support for Ukraine’s economic, humanitarian, and security needs.
The document offers fresh insight into Biden’s thinking as he attempts to halt the largest war in Europe since World War Two and prepares for a Nov. 8 midterm election that could see his Democratic Party lose control of Congress.
His administration is “making real headway cleaning up the fiscal mess I inherited”, Biden said, and would reduce the federal deficit by more than $1.3 trillion this year with $1 trillion in further reductions planned over the next decade.
“For most Americans the last few years were very hard, stretching them to the breaking point. But billionaires and large corporations got richer than ever,” he said, adding, “That’s not fair.”
The U.S. federal government, on the hook for rising healthcare and social spending, especially for older Americans, has spent more money than it has taken in for each of the last 20 years.
BILLIONAIRES TAX
Lindsey Graham, the top Republican on the Senate Budget Committee, said Biden’s tax hikes would harm U.S. workers and the overall economy, while increasing deficits.
Under Biden’s policies, deficits as a share of the economy would fall to 5.8% of gross domestic product (GDP) this year and stay below 5% over the next decade. That compares to 14.9% of GDP in 2020, the last year of the Trump administration, the White House said.
Biden’s plan increases spending on community policing, efforts to fight gun crime, and bigger investments in crime prevention and community violence interventions, as well as some $50 billion in added funding to address the critical shortage of affordable housing.
The plan does not include line items for bolstering climate change, healthcare, education, and manufacturing competitiveness, after disagreements within the Democratic party sank Biden’s “Build Back Better” bill.
Instead, it has a deficit-neutral reserve fund to allow lawmakers to negotiate those items, Shalanda Young, director of the Office of Management and Budget, said.
It introduces a new minimum tax requiring the very wealthy to pay at least 20% of their income in taxes, including on the gains on investments that have not been sold.
That tax would apply to 0.01% of American households – those worth over $100 million – with more than half of the new revenue coming from households worth more than $1 billion, the White House said. It would reduce the government deficit by $360 billion over the next decade.
The budget plan also targets U.S. corporate buybacks, requiring company executives to hold on to company shares that they receive for several years after a stock buyback.
The budget would raise the corporate tax rate to 28% while making changes to the corporate tax code to reward job creation and investment.
It calls for $773 billion for the Department of Defense, plus $40 billion for defense-related programs at the FBI, Department of Energy and other agencies.
Russia’s Feb. 24 invasion of Ukraine has intensified concerns about European security, while the Biden administration continues to invest in research and development of hypersonic missiles and other modern capabilities.
The United States is not directly engaged against Russia in the Ukraine war but is giving Kyiv weapons and extensive assistance. Working with European allies, it also has imposed heavy economic sanctions against Russia.
(Reporting by Trevor Hunnicutt and Andrea Shalal; Additional reporting by Mike Stone, David Lawder and Susan Heavey; Editing by Mark Porter, Heather Timmons, Bill Berkrot and Aurora Ellis)
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WASHINGTON (Reuters) – U.S. President Joe Biden is expected on Monday to ask Congress for record peacetime military spending while raising taxes from billionaires and projecting lower government deficits.
Biden’s budget proposal for the fiscal year starting Oct. 1 lays out his administration’s priorities but it is merely a wish list as lawmakers on Capitol Hill make the final decisions on budget matters.
The document offers fresh insight into Biden’s thinking as he attempts to halt Russia’s invasion of Ukraine and prepares for a Nov. 8 midterm election that could see his Democratic Party lose its control of Congress.
“The President’s Budget will reflect three important values: fiscal responsibility, safety and security at home and abroad, and a commitment to building a better America,” a White House official said.
“The Budget will help keep our communities safe by putting more cops on the beat for community policing, fighting gun crime, and investing in crime prevention and community violence interventions,” the official said.
Forced by disagreements within his own party to pump the brakes and instead continue negotiating on vast swathes of his domestic “Build Back Better” agenda, Biden is unlikely to include line items for all of his ideas on how to improve the country’s environment, healthcare, education, housing infrastructure and manufacturing competitiveness.
But he will use the opportunity to throw his explicit public support for the first time behind a new tax requiring billionaires to pay at least 20% of their income in taxes, including on the gains on investments that have not been sold.
The White House says the tax would apply to 0.01% of American households, those worth over $100 million, and that more than half of the new revenue would come from households worth more than $1 billion.
The measure would reduce the government deficit by $360 billion over the next decade, they said.
Biden has long pushed the message that the U.S. tax system rewards the wealthy too much and that the rich should pony up for more social services.
Two sources told Reuters in February that about $773 billion would be made available for the Department of Defense, which in combination with other spending would lead to a total national security budget above $800 billion.
Russia’s Feb. 24 invasion of Ukraine has intensified concerns about European security, while the Biden administration continues to invest in research and development on hypersonic missiles and other modern capabilities.
The United States is not directly engaged against Russia in the Ukraine war but is giving Kyiv weapons and extensive assistance. Working with European allies, it has also imposed heavy economic sanctions against Russia.
The budget will also project a 2022 deficit of more than $1.3 trillion lower than last year, as the U.S. economy rebounds from the COVID-19 recession and Biden’s administration puts more focus on fiscal sustainability.
The U.S. federal government, on the hook for rising healthcare and social spending, especially for the elderly, has spent more money than it has taken for each of the last 20 years.
(Reporting by Trevor Hunnicutt; Additional reporting by Mike Stone; Editing by Stephen Coates)
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