WASHINGTON -- President Joe Biden on Thursday proposed a $6.8 trillion budget that sought to increase spending on the military and a wide range of new social programs while also reducing future budget deficits, defying Republican calls to scale back government and reasserting his economic vision before an expected reelection campaign.
The budget contains some $5 trillion in proposed tax increases on high earners and corporations over a decade, much of which would offset new spending programs aimed at the middle class and the poor. It seeks to reduce budget deficits by nearly $3 trillion over that time, compared with the country's current path.
It reaffirms Biden's case that he can prevent the growing debt burden from weighing on the economy while expanding spending and protecting popular safety-net programs -- almost entirely by asking companies and the top earners to pay more in taxes.
But after claiming credit for a $1.7 trillion decline in the annual deficit over the past year, Biden now sees the deficit increasing again in the 2024 fiscal year, to $1.8 trillion. The jump is larger than other forecasters, such as the Congressional Budget Office, have projected. It is driven by rising costs of servicing the national debt as the Federal Reserve raises interest rates to curb inflation and by new programs the president is proposing that are not fully offset by tax increases in their first year.
The plan drew swift criticism from Republicans, who are locked in an economically perilous debate with Biden over the borrowing limit, which House conservatives refuse to raise unless he agrees to sharp spending cuts.
Sen. Charles Grassley of Iowa, the top Republican on the Budget Committee, said Biden's spending blueprint was "an unserious proposal and will be treated as such by both parties in Congress."
The budget plan, he said, "is a road map for fiscal ruin."
The proposals stand little chance of becoming law because Republicans won control of the House in November. Instead, Biden's budget request was a political statement of values aimed at winning public opinion amid the debt-limit fight and a nascent 2024 campaign.
He unveiled the plan formally on Thursday in Philadelphia. His budget would "lift the burden off families in America," the president said during a swing-state speech meant to contrast his economic vision with that of Republicans who have called for spending cuts.
"My budget is about investing in America and all of America," Biden said during a roughly 50-minute speech to scores of union workers, Biden supporters and local Pennsylvania politicians. "Too many people have been left behind and treated like they're invisible. Not anymore. I promise I see you."
The president emphasized a message of bolstering manufacturing, an effort many of his allies believe can sway blue-collar workers who in recent years have lost faith in the Democratic Party.
The proposals in the budget showcased Biden's early success in expanding the federal government's role in the economy, and they reaffirmed his push for more. On Biden's watch, its numbers show, domestic spending in areas such as research and support for manufacturing has grown significantly larger as a share of the economy than was considered in the budget plans of the last Democratic administration, under President Barack Obama, when Biden was vice president.
Yet the president doubted that GOP lawmakers could make their numbers match their calls for a balanced budget and he suggested that any efforts to do so could come at the expense of middle-class families.
"How are they going to make the math work?" Biden said. "What are they going to cut?"
In his first two years as president, Biden signed laws to expand and rebuild crucial infrastructure including water pipes and highways, bolster U.S. manufacturing of semiconductors and other high-tech goods, and accelerate a transition from fossil fuels toward low-emission sources of energy to fight climate change. He delivered military aid to Ukraine in its fight against Russia and signed a bipartisan law to increase federal medical care for military veterans exposed to toxic burn pits.
He also left much of his economic agenda unfinished, a fact reflected in his budget, which renewed calls for programs that failed to pass muster when his party controlled Congress.
"This president clearly believes the way to grow this economy is investing in the middle class and working families," Shalanda Young, director of the White House budget office, told reporters Thursday.
SPENDING, TAXES
The president's budget proposed $400 billion to deliver affordable child care for parents, $150 billion for home care for older Americans and disabled people, and nearly $400 billion to make permanent expanded health coverage assistance through the Patient Protection and Affordable Care Act. He would spend $325 billion to guarantee paid leave for workers and nearly $300 billion combined for free community college and prekindergarten for students. He is seeking $100 billion in additional assistance to lower housing costs for homeowners and renters.
Biden would reinstate for three years an expanded child tax credit, which was included in the economic aid bill he signed in 2021 but expired last year, as a means of reducing child poverty. He would make permanent a change in the credit that allows people to benefit from it in full even if they do not make enough money to owe federal income taxes. Together, the changes would cost more than $400 billion.
To help offset costs, Biden proposed a series of tax increases on corporations and the top-earning Americans. They include a 25% tax aimed at billionaires (he requested a similar tax last year but at a lower rate: 20%). He also called for quadrupling a tax on stock buybacks and renewed his push to roll back President Donald Trump's tax cuts for high earners and to raise the corporate income tax rate to 28% from 21%.
Biden proposed increasing and expanding a tax on Americans earning more than $400,000 as part of efforts to extend the solvency of Medicare by a quarter-century. He is also seeking new savings for the government based on more aggressive negotiation over prescription drug prices.
But for the third consecutive budget, Biden did not put forth any new initiatives to extend the solvency of Social Security -- unlike during the 2020 campaign, when he sought to expand benefits and bolster the program's trust fund by effectively raising payroll taxes on people earning more than $400,000 a year.
The budget offered few paths to compromise between Biden and Republicans on fiscal issues. One potential area of common ground was responding to what both parties call a growing military and economic threat from China. The budget proposed $9.1 billion in investments next year through the Pentagon's "Pacific Deterrence Initiative," which includes expenditures on new weapons systems that can be used to protect allies and defend U.S. interests in the region. It also asks for $400 million to a fund dedicated to countering the influence of the Chinese Communist Party abroad, such as exposing Chinese disinformation campaigns.
The budget also refers to various domestic investments, which the administration argues are needed to make the U.S. economy more competitive with China. That includes money for domestic research into agriculture, an area where it says China has become the largest funder of research, as well as major investments in the manufacturing of semiconductors, clean energy products and other technologies in the United States.
McCARTHY, SCHUMER WEIGH IN
Still, House Speaker Kevin McCarthy of California and his lieutenants reiterated Thursday that they intended to insist on significant reductions in spending before they would consider allowing the federal debt limit to be raised -- even though a stalemate over the debt limit could shake the world economy and endanger the retirement savings of millions of Americans.
"It just seems like it's going to create the biggest government in history. I don't think that's what we need at this time," he said.
"We must cut wasteful government spending," McCarthy and the other members of his leadership team said in a joint statement issued after Biden's budget was released. "Our debt is one of the greatest threats to America, and the time to address this crisis is now."
McCarthy has called for putting the U.S. government on a path toward a balanced budget. But by refusing to raise taxes or cut Social Security and Medicare spending, GOP lawmakers face some harsh math that makes it hard to reduce deficits without risking a voter backlash before a presidential election. He has said his plan's release was pushed back because Biden's proposal was only now coming out.
Senate Majority Leader Charles Schumer, D-N.Y., expressed skepticism that McCarthy has any coherent plan that House Republicans can coalesce around. "Enough with the dodging, enough with the excuses," Schumer said. "Show us your plan. And then show us how it's going to get 218 votes on your side of the aisle."
Biden's deficit reduction goal is significantly higher than the $2 trillion that he had promised in his State of the Union address last month.
With the economy already in a fragile state because of high inflation, if Biden and Congress cannot agree to raise the statutory debt cap of $31.4 trillion by this summer, the government could default on payments and perhaps shove the country into a recession.
The budget also shows the shadow of Trump's legacy, as provisions in his 2017 tax cuts will expire after 2025. Biden wants to eliminate elements of that overhaul, arguing that lower taxes failed to produce the growth that Trump promised. But Biden's budget does not address tax cuts that benefited households making less than $400,000: Their expiration could amount to a tax increase that would violate a pledge by Biden to only raise taxes on the wealthy.
Information for this article was contributed by Jim Tankersley of The New York Times and by Darlene Superville, Josh Boak and Kevin Freking of The Associated Press.