Biden unveils ‘blue-collar’ budget plan with tax hikes for America’s wealthiest

Joe Biden on Thursday unveiled his budget, a sprawling plan that the White House says reflects the president's commitment to creating a fairer economy while challenging Republicans who are demanding steep cuts to federal spending programs.

The $6.8tn budget request, the third such request of Biden's presidency and the first to a divided Congress, is effectively dead on arrival with Republicans in control of the House, and sets the stage for a high-stakes showdown over the nation's finances. Even so, it frames the president's policy aspirations ahead of his expected campaign for re-election in 2024.

Biden's budget blueprint would cut the federal deficit by nearly $3tn over the next decade, largely by raising taxes on corporations and high earners. It also includes proposals aimed at lowering the cost of healthcare, prescription drugs, childcare, housing and education while making new investments in domestic manufacturing, cancer research and a paid family leave program.

It calls for restoring the child tax credit that helped reduce child poverty by half when Congress temporarily expanded the benefit during the pandemic. Under Biden's plan, families could claim as much as $3,600 a child, compared with the current level of $2,000.

Amid Republican claims that the Democrats are weak on crime and border security, Biden's plan includes funding for more police officers and border patrol agents. Additional funding would support new technology at points of entry along the border and for cracking down on fentanyl trafficking, according to a factsheet provided by the White House.

As tensions rise with Russia and China, Biden proposed a more than 3% increase to defense spending, an $886bn request that includes support for Ukraine and increased funding to allies in the Indo-Pacific region.

Biden will formally introduce his spending plan, which he has described as a "blue-collar blueprint", on Thursday afternoon in Pennsylvania, a battleground state that helped lift him to the White House in 2020. It is an unusually high-profile rollout for a budget proposal that is often greeted with a resounding thud on Capitol Hill.

"When you look at this president's view of the world and what this budget puts forward, it shows you what he values," Shalanda Young, director of the Office of Management and Budget, told reporters on Thursday. "And that's what this is going to be about that. And we're happy to have that debate with anybody: who are you for?"

Republicans swiftly dismissed the plan as inadequate to address the nation's debt, which the government projects will rise by $19tn over the next decade.

In a joint statement, top House Republicans accused Biden of "shrugging and ignoring" the national debt, which they called one of the "greatest threats to America".

"President Joe Biden's budget is a reckless proposal doubling down on the same far left spending policies that have led to record inflation and our current debt crisis," the statement said.

Underwriting his plans, the president calls for new tax hikes on the wealthy, including a repeal of the tax cuts that Donald Trump signed into law in 2017 - cuts that disproportionately benefited wealthy Americans. Biden also proposes quadrupling a tax on stock buybacks and raising the corporate income tax rate to 28%.

At the heart of his budget is a plan that the White House says would help avert a Medicare funding crisis and extend the program's solvency for at least 25 years. The plan would raise Medicare taxes from 3.8% to 5% for those who earn more than $400,000 per year to protect the government health insurance program for adults over 65, which is at the heart of a brewing policy debate poised to play a central role in the 2024 presidential election.

Republicans have so far refused to put forward a counter-proposal, despite promises to put the US on a path to a balanced budget. Yet by rejecting tax increases and denying charges that they would cut social security or Medicare programs, it is unclear how Republicans would achieve that goal.

"Republicans keep saying they want to reduce the deficit, but they haven't put out a comprehensive plan showing what they'll cut," Young said. "We're looking forward to seeing their budget so the American people can compare it to what we're putting out today, this president's vision."