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Biden's $6.8 tn budget faces hurdles as it proposes higher taxes on big biz

US President Joe Biden's $6.8 trillion budget is unlikely to pass muster in the Republican-dominated House of Representatives as it proposes higher taxes on big businesses and the rich and elite

Joe Biden, US President

Photo: Bloomberg

IANS Washington
US President Joe Biden's $6.8 trillion budget is unlikely to pass muster in the Republican-dominated House of Representatives as it proposes higher taxes on big businesses and the rich and elite, even as the Republicans are gridlocked with Democrats on the debt ceiling issue and are demanding spending cuts.
Biden has asked the Congress for funds worth trillions in new spending that's unlikely to go through the Republican house even as he seeks to reduce deficits by raising taxes on business houses and the rich and the elite, media reports say.
Having lost the majority in the house in the 2022 midterm elections, his persistent arguments and even the White House statement that monies would be spent on social welfare programmes and deficit would be cut by $3 trillion over the next decade has not cut much ice with the representative across the aisle.
A White House statement said President Biden has long believed that we need to grow the economy from the bottom up and middle out, not the top down. Biden's economic strategy has produced historic progress for the American people despite several odds and hurdles facing the economy, it said.
More than 12 million jobs - more than what any President has created in a four-year term - including 800,000 manufacturing jobs, have been added. The unemployment rate has fallen to 3.4 per cent, the lowest in 54 years. The Black and Hispanic unemployment rates are near record lows.
The President has given families more breathing room, cutting prescription drug costs, health insurance premiums, and energy bills, while driving the uninsured rate to historic lows. His plan is rebuilding America's infrastructure, making the economy more competitive, investing in American innovation and industries that will define the future, and fuelling a manufacturing boom that is strengthening parts of the country that have long been left behind while creating good jobs for workers, including those without college degrees, the White House statement said.
President Biden has cut the deficit by more than $1.7 trillion against his predecessor who had raised it during his first two years in office. Reforms he signed into law to take on Big Pharma, lower prescription drug costs, and make the wealthy and large corporations pay their fair share will reduce the deficit by hundreds of billions of dollars more over the coming decade, it added.
The President's Budget details a blueprint to build on this progress, deliver on the agenda he laid out in his State of the Union, and finish the job: No one earning less than $400,000 per year will pay a penny in new taxes.
Meanwhile, the New York Times outlined the reasons for why Biden's budget was unlikely to come through the house as it contained some $5 trillion in proposed tax increases on high earners and corporations over a decade, much of which would offset new spending programmes aimed at the middle class and the poor
Biden had laid out a $6.8 trillion budget that seeks to enhance military spending and introduce a range of new social welfare programmes while at the same, attempt to reduce future budget deficits. This defied the Republicans' calls to scale back government spending reasserting his economic vision before an expected re-election campaign for a 2nd presidential run in 2024.
He firmly believes he can stem the recurring debt burden from weighing on the economy while expanding spending and protecting popular safety-net programmes - almost entirely by asking companies and the wealthy to pay more in taxes. Republicans think it's a specious argument and it won't work.
The President had indeed succeeded in bringing down the deficit by $1.7 trillion over the past year, but is now alarmed that it has shown signs of growing again in the 2024 fiscal year, to $1.8 trillion. The spurt seems higher than even the Congressional Budget Office projections. Servicing of the national debt is the main driver because as the Federal Reserve raises interest rates to curb inflation and government launches new programs, they will not be offset by tax increases in their first year, economists say.
The Republicans and the Democrats are already in a gridlock debate over the government breaching the threshold limit for borrowing at $31.4 trillion and asking for the ceiling to be raised. The house conservatives are in no mood to raise the limit unless government vows sharp spending cuts. Given this scenario, the budget is unlikely to go through past the Republicans, unless some cross the floor.
Senator Charles E. 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 is a road map for fiscal ruin," he said.
Biden's budget proposals stand little chance of being legislated as Republicans now control the House since November 2022. Media experts however perceive Biden's budget as a political statement of values aimed at winning public opinion amid the debt-limit fight and a nascent 2024 campaign.
Key takeaways from his Biden's budget, according to the Times are:
Recapturing a Centrist Identity: The aim is to curb the budget gap and make it one of the Democrats' centerpiece promises. The move's seen as part of a wider shift that projects the President as one showing more concerns of the political middle.
Reducing Deficit: Rather than talk about hard choices and freezing spending, the President has pledged to defend popular federal programmes and rely on taxing corporations and high earners. This represents a significant break from the past budgets.
A Missing Plan for Social Security: Biden's previous budgets did not specify or name the beneficiary programmes and this one too does not. The latest budget makes no mention of any programme which he had promised to shore up to during the 2020 campaign, The Times said in a report.
NY Transit Projects: President Biden's budget has planned new transit routes in New York city valued over $1.2 billion .The Second Avenue Subway extension and new train tunnels under the Hudson River. "My budget is about investing in America and all of America," he said during a speech to scores of union workers in the swing state of Philadelphia.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Mar 18 2023 | 10:15 PM IST

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