WASHINGTON — President Biden will propose policies Thursday aimed at cutting federal budget deficits by nearly $3 trillion over the next 10 years as his administration embraces debt reduction policy amid a fight with Republicans over borrowing limit increases. of the nation, said a senior administration official. On Wednesday.
Biden’s plans, which will be detailed as part of his budget plan, are expected to rely largely on a familiar batch of corporate and high-income tax increases along with savings from some spending cuts. These include efforts to save money in federal health care programs by expanding legislation he signed last year that allows Medicare to negotiate the price of certain prescription drugs.
The president is facing pressure from Republicans, who gained control of the House last fall, to change the nation’s fiscal trajectory. House Republicans have refused to raise the nation’s debt limit, which limits the amount of money the federal government can borrow, unless Biden agrees. to sharp cuts in federal spending.
To help increase federal revenue and reduce the nation’s reliance on borrowed money, Mr. Biden is expected to announce a new tax on American households worth more than $100 million that would apply to both his earned income and unrealized gains in the value of your liquid assets. assets, such as stocks. Biden will also ask to quadruple a share buyback tax that was passed as part of a sweeping tax, health care and climate bill he signed last year.
White House officials said this week the budget would include an increase and expansion of a high-income investment tax, which would go to the Medicare trust fund. That tax proposal, plus proposed savings from additional Medicare negotiations on prescription drugs, would reduce deficits by about $900 billion net, according to Treasury Department estimates shared by the White House.
The president is also expected to continue proposing some tax increases to offset the cost of parts of his agenda that have not yet been approved by Congress. That agenda includes efforts to expand access to and lower the cost of child care, provide federally guaranteed paid leave for workers, establish universal pre-K, and allow students to attend community college for free.
Biden’s plans to cut the deficit are unlikely to appease Republicans. He has refused to negotiate on the debt limit and has said he will not cut Social Security or Medicare benefits, two popular safety net programs. But he has said repeatedly that he is open to reducing deficits by raising taxes on corporations and the wealthy.
The nearly $3 trillion total was first reported by The Associated Press. It’s an increase in deficit reduction that Mr. Biden anticipated in his State of the Union address, saying that “the plan that I’m going to show you is going to reduce the deficit by another $2 trillion” without cutting “one bit.” “. Medicare or Social Security.”
The federal government has run a deficit every year since 2000, spending more money than it takes in in tax revenue. The deficit soared under President Donald J. Trump after the onset of the pandemic recession, prompting Congress to pass trillions of dollars in aid for individuals, businesses, and state and local governments. It remained high in 2021 under Biden, who signed a $1.9 trillion economic relief package shortly after taking office, but declined last year.
The nonpartisan Congressional Budget Office projects the deficit will grow slightly this fiscal year, from $1.375 trillion to $1.41 trillion, and then continue to rise over the course of the decade, surpassing $2 trillion by 2032. Those increases are being driven by in part because of rising Medicare and Social Security costs as baby boomers retire, and because of the rising cost of servicing the $31.4 trillion national debt after a series of rapid interest rate increases by the Federal Reserve in an attempt to control high inflation.
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From 2024 to 2033, according to the budget office projects, deficits will total more than $20 trillion, bringing the gross federal debt to almost $52 trillion.
Mr. Biden’s proposals, if fully enacted, would reduce that growth by about 15 percent. It is not likely that they are. Republicans are strongly opposed to Biden’s tax proposals and have tried to repeal the Medicare prescription drug savings measure he signed last year.
Through the laws he has signed and the executive actions he has issued, Mr. Biden has passed policies that would add about $5 trillion to the national debt over a decade. according to estimates by the Committee for a Responsible Federal Budget in Washington. These include his 2021 financial aid bill and debt relief for certain student loan borrowers, which is being challenged in the Supreme Court.
It’s unclear how Biden settled on the final figure of nearly $3 trillion for his budget deficit reduction, or to what extent he agrees with Republicans who say the nation’s current debt and deficit levels pose a risk. for the economy.
Karine Jean-Pierre, the White House press secretary, did not directly respond to a reporter’s questions this week about how Biden arrived at his preferred level of deficit reduction or whether the path of national debt growth is hurting the US. the economy.
“The president understands his fiscal responsibility. He understands how important it is to reduce the deficit,” said Ms. Jean-Pierre.
“He is going to present a fiscal budget that is going to be responsible,” he added.
Zolan Kanno Young contributed reporting.