Biden's $7.3T Budget Sets Up Tax Fight With Trump

Those savings help offset $500 million to help developing countries combat climate change and $6.5 billion to help rural electric providers adopt zero-emission power and to build out grids.

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Debt and Interest Rates

Republicans pounced on the plan’s deficit and debt projections, shortfalls made worse by higher interest rates.

“The price tag of President Biden’s proposed budget is yet another glaring reminder of this Administration’s insatiable appetite for reckless spending and the Democrats’ disregard for fiscal responsibility,” House Republican leaders said in a statement, calling the plan “a roadmap to accelerate America’s decline.”

Under Biden’s proposal, the deficit would decline to $1.78 trillion next year from $1.86 trillion currently projected for 2024.

But over the next decade, Biden’s budget sees adding $16.3 trillion to deficits, about $3 trillion less than the current path. The annual deficit would decline as a percentage of the economy from 6.6% to 3.9% in 2034, but US debt owed to the public would rise from $28 trillion today to $45 trillion in that time.

The budget proposal keeps in place for 2025 discretionary spending caps agreed to with Congress in last year’s debt ceiling deal.

House Republicans released their own proposal last Thursday, which would cut $14 trillion in deficits and claims to balance in ten years while avoiding tax increases.

Biden’s budget doesn’t explain how to pay for extending Trump’s tax cuts for the middle class past 2025, something that could cost trillions more.

Prescription Drugs

Biden has proposed a massive expansion of the government’s ability to negotiate prescription drug prices.

His plan banks those savings, even though they are fiercely opposed by the pharmaceutical industry.

While the administration is currently bargaining with drugmakers to reduce the cost of ten popular drugs for seniors on Medicare, Biden envisions expanding that program over the next decade. The administration projects it would save $200 billion in taxpayer money that would otherwise go to drug companies.

Drug companies take another hit in Biden’s budget, which would raise taxes on multinational corporations to 21%. Health insurers also take a cut, via a call for capping prescription drug costs at $2,000 for all Americans – not just seniors on Medicare.

Unity Agenda

Biden also details his self-proclaimed “unity agenda,” a package of proposals he argues can garner support from both parties.

Those items include $12 billion next year for a new office to promote women’s health, as well as funding for programs to combat opioid abuse and $5 billion in new funding for a health-care and benefit fund for service members exposed to toxic chemicals.

Other proposals include $258 billion to build or preserve over 2 million units of affordable housing and expanding Pell Grants for students from low-income families.

President Joe Biden in the State Dining Room of the White House. Credit: Bloomberg