President Joe Biden's upcoming budget proposal aims to cut deficits by nearly $3 trillion over the next decade, the White House said Wednesday.
That deficit reduction goal is significantly higher than the $2 trillion that Biden had promised in his State of the Union address last month. It also is a sharp contrast with House Republicans, who have called for a path to a balanced budget but have yet to offer a blueprint.
The White House has consistently called into question Republicans' commitment to what it considers a sustainable federal budget. Administration officials have noted that the various tax plans and other policies previously backed by GOP lawmakers would add roughly $3 trillion to the national debt over 10 years.
Biden intends to discuss his budget proposal on Thursday in Philadelphia. The Associated Press reported the deficit reduction goal earlier Wednesday, citing an administration official speaking on the condition of anonymity.
“This is something we think is important,” White House press secretary Karine Jean-Pierre said in confirming the president's plan. "This is something that shows the American people that we take this seriously.”
As part of the budget, the president already has said he wants to increase the Medicare payroll tax on people making more than $400,000 per year and impose a tax on the holdings of billionaires and others with extreme degrees of wealth.
It's a delicate time with the U.S. economy on edge because of high inflation. The government this summer is likely to exhaust its emergency measures to keep Washington running, setting up the risk of a default on payments along with cataclysmic series of job losses that could crash the economy.
Biden's package of spending priorities is unlikely to pass the House or Senate as proposed. Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday that the plan “will not see the light of day," a sign that it might primarily serve as a messaging document going into the 2024 elections.
Rohit Kumar, a former McConnell aide who is now an executive with the tax consultancy PwC, said Biden's plan does matter “in terms of putting ideas out there." He said that if Biden won a second term, elements of this spending blueprint could be part of negotiations in 2025 about the expiring provisions in the 2017 tax cuts that President Donald Trump signed into law.
Given the scope of the deficit reduction in Biden's proposal, Kumar said it was unlikely that the president's plan would identify which parts of the expiring tax cuts he plans to keep, as the president has vowed no tax increases on anyone making less than $400,000. But while the White House has charged that Republican plans increase deficits by $3 trillion, about $2.7 trillion of that total comes from renewing all the Trump-era tax cuts that disproportionately favored the wealthy.
In February, the nonpartisan Congressional Budget Office estimated that the national debt held by the public will grow by more than $20 trillion over the next decade. The publicly held debt — which reflects the cumulative impact of yearly deficits — would be equal to 118% of U.S. gross domestic product, up from 98% this year. Biden's budget would reduce the debt, though it would still be high relative to historical levels.
Republicans, newly in control of the House, are demanding sharp spending cuts. Biden has suggested that tax increases on the earnings and holdings of the country's wealthiest households can bolster government finances and also improve Medicare and Social Security.
The president contended in a Monday speech that there are 680 billionaires in the United States and that many of them pay taxes at a lower rate than do families who think of themselves as being in the middle class. Biden said not to hold him to the precise number of billionaires, but that they could afford to pay more for the good of the country.
“No billionaire should be paying a lower tax rate than a fire fighter — nobody,” Biden said at a gathering of the International Association of Fire Fighters.