US President Joe Biden released his administration's budget proposal for fiscal 2024 on Thursday. While the document is always a bit of a wish list, and especially so given the current divided Congress, the Democratic president's spending and revenue priorities will be key factors in upcoming negotiations with Republicans over raising the debt ceiling.
Here are some main elements:
Cutting national deficit
Biden doubled down on a State of the Union pledge to trim the national deficit, promising to cut almost $3 trillion over 10 years, with tax hikes on companies and high earners.
The budget projects $6.883 trillion in total spending and $5.036 trillion in revenues, resulting in $1.846 trillion deficit in fiscal year 2024 that begins on Oct. 1.
It projects annual deficits over $1 trillion each year through 2033. The US federal deficit totaled $1.4 trillion in 2023, the Congressional Budget Office said.
As part of the effort, the administration said it would launch new initiatives to crack down on fraud in pandemic-era spending, and other government programs. Biden also wants to increase fines on companies that violate labor laws and divert funding that would have gone to federal prison construction.
Boosting medicare with taxes
Biden's budget calls for raising the Medicare tax on income above $400,000 from 3.8% to 5%, and expand the federal government's ability to negotiate drug prices to keep the healthcare program solvent, the White House said this week.
The White House wants Congress to give the administration permission to negotiate prices on more drugs with manufacturers and to let those negotiations start sooner after drugs come to market. The budget would also require commercial health insurance plans to provide rebates when some drug prices increase faster than the rate of inflation.
Other healthcare proposals will include increasing access to HIV prevention drugs for people in enrolled in Medicaid and requiring insurance plans to pay back that federal program when they spend less on patient care. Gilead Sciences' Truvada and Descovy are approved in the US for pre-exposure prophylaxis for HIV.
Hiking buyback tax
Biden proposed quadrupling the 1% tax on stock buybacks that took effect in January, to encourage companies to invest in their growth instead of boosting shareholders.
The White House has said taxing buybacks levels a distortion in the tax system. Dividends, it said, are taxable for many shareholders but share buybacks weren't taxable until this year. The plan to boost the buyback tax may struggle to move through the US Congress where Republicans control the House.
Billionaire minimum tax, capital gains
Biden called for a 25% minimum tax on households worth more than $100 million. The White House refers to it as the "billionaire minimum income tax."
The tax would make sure the wealthiest of Americans do not pay a tax rate lower than firefighters and teachers, the White House said. Several attempts by Democrats to push such a proposal have failed to move forward in Congress.
He called for restoring the capital gains tax to 39.6% for those with more than $1 million in income.
Raising corporate tax rate
Biden includes a proposal to raise the corporate tax rate to 28%, higher than the current level but still below the 35% tax rate that prevailed before 2017 tax cuts enacted by his predecessor Donald Trump.
He will also seek to reduce the incentives for companies to book profits in low-tax jurisdictions and raise the tax rate on US multinationals’ foreign earnings from 10.5% to 21%.
Childcare, tax credits
Biden re-upped a provision of his 2021 COVID plan that expanded the child tax credit to lower-income families. Twenty-two states have already begun work on similar provisions.
Biden also propose boosting federal funding for childcare and early childhood education by $22.1 billion in 2024, up 10.5% from the 2023 enacted level, including $9 billion for federal block grants.
His plan would boost funding for Head Start programs by more than 9% to $13.1 billion, which would allow all of the country's four million 4-year-olds to attend free preschool, but drops funding for universal preschool for 3-year-olds that Biden had proposed earlier.
Defense spending
The White House also requested $842 billion for the defense budget, up from $816 billion allocated this year.
Eliminating tax benefits
Biden proposed cutting tens of billions of dollars in tax benefits currently enjoyed by oil and gas companies, real estate investors, fund managers, wealthy retirement savers and cryptocurrency traders.
The budget would also end "special tax treatment" for oil and gas companies and "fossil fuel tax preferences", according to the document.
It would also propose to end the "like-kind exchange" benefit that allows real estate investors to defer some taxes indefinitely. And it renews Biden's pledge to end the carried interest "loophole" that effectively allows fund managers to pay a lower rate on their income than many wage workers.
Biden also wants to put a limit on how much people with incomes over $400,000 can hold in retirement accounts that enjoy tax benefits. And he would remove a "special tax subsidy" on cryptocurrency transactions that is not extended to stocks.
Border protection
The budget calls for a nearly $800 million increase in money for immigration and border authorities, bringing their total funding to nearly $25 billion. That figure comes as Biden, whose immigration reform proposals have failed to win congressional backing, has come under intense pressure from Republicans over illegal border crossings.