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

Joe Biden on Thursday unveiled his budget, a sprawling policy vision that the president says reflects his commitment to building a fairer economy while drawing a sharp contrast to Republicans who are demanding steep cuts to federal spending programs.

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

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.

"My budget is going to give working people a fighting chance," Biden said at a union training center in Philadelphia. "I value everyone having an even shot - not just labor, but a small-business owner, farmers, and so many other people who hold the country together who have been basically invisible for a long time."

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 and partners in the Indo-Pacific region.

Biden's request arrives on Capitol Hill at a fragile moment for the US economy. Inflation appears to be easing, but remains high. Meanwhile, economists are warning that if Congress and the White House fail to raise the nation's borrowing limit, the US government could default on its payments, potentially triggering millions of job losses and a deep recession.

"I'm ready to meet with the speaker anytime - tomorrow if he has his budget," Biden said of negotiations with McCarthy. But he repeated that he would not allow Republicans to leverage the full faith and credit of the United States to extract spending cuts.

Biden said his budget was about creating "a little bit more breathing room" for American families and those who have been "invisible for a long time".

"Show me your budget, I will tell you what you value," Biden told the audience, quoting his father.

"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, House speaker Kevin McCarthy and other top Republicans accused Biden of "shrugging and ignoring" the national debt, which they called one of the "greatest threats to America".

"President 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.

But Democrats rallied around the president's policy vision. Chuck Schumer, the Senate majority leader, said Biden's budget would "affect every single family from coast to coast".

Climate groups praised the proposed investments in clean energy jobs and plans to end oil and gas subsidies.

In a statement, Varshini Prakash, the executive director of the youth-led Sunrise Movement, said Biden's plan was the "kind of thing young people in this country want to see ahead of 2024".

But, given the plan's doomed prospects in Congress, she said it was imperative the president use his authority to bypass Republicans, such as declaring a climate emergency and invoking the Defense Production Act to ramp up the transition to clean energy.

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% and a new billionaire tax that would force the wealthiest 0.01% of Americans to pay a 25% minimum tax on their income.

"No billionaire should be paying a lower tax than somebody working as a school teacher or a firefighter," the president said in Philadelphia.

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.

"I guarantee you I will protect social security and Medicare without any change - guaranteed," Biden said, drawing some of the loudest applause of his nearly hour-long speech. "I won't allow it to be gutted or eliminated as Maga Republicans have threatened to do."

Republicans have accused Biden of distorting their position on the issue and insisted they have no plans to cut either program. But they have yet to put forward a counter-proposal, despite promises to put the US on a path to a balanced budget.

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.

"How they gonna make the math work? What are they gonna cut?" Biden said.

He recalled the rowdy exchange over the issue during his State of the Union address last month, when Republicans reacted angrily to his accusation that they had proposed slashing the programs.

On Thursday, Biden said he was "counting on them keeping their word" but pledged: "Just in case they don't, I'm around."