Taxing the rich to cut deficit: Five takeaways from President Biden's proposed budget

WASHINGTON ― President Joe Biden released a federal budget Monday that carves out new social programs for housing, health care and child care and reduces the deficit by $3 trillion over the next decade by raising taxes on corporations and the wealthiest Americans.

Biden's $7.3 trillion budget for the 2025 fiscal year ? a 4.7% increase over the current budget ? seeks to boost defense spending by 1% and non-defense discretionary spending by 2.4%.

The spending complies with caps that House Republicans pushed in last year's Fiscal Responsibility Act in exchange for raising the debt limit. Although the budget has no chance of advancing in the Republican-controlled House of Representatives, it establishes Biden's priorities for the campaign and creates contrasts for an election rematch against presumptive Republican nominee Donald Trump.

"We are the only nation that has emerged from every crisis we have entered stronger than we went in. While my Administration has seen great progress since day one, there is still work to do. My Budget will help make that promise real," Biden wrote in a budget document to Congress.

Here are five takeaways on the budget:

Tax hikes on corporations, billionaires to cut deficit

Biden's budget proposes tax hikes on billionaires and corporations that would raise tax receipts by $4.9 trillion over the next 10 years to offset new programs, cutting the deficit by $3 trillion over the same period.

Biden has proposed reversing the corporate tax rate cut that Trump and congressional Republicans passed in 2017 by raising the rate to 28% from 21%.

Biden is also pushing to increase a new minimum tax on the largest billion-dollar corporations ? which he signed into law in 2022 ? from 15% to 21%.

The president's budget includes a new 25% minimum tax on the wealthiest 0.01% of Americans, which includes those with wealth of more than $100 million. He also is calling for new plans to deny tax deductions for corporations that pay any employee more than $1 million and close a loophole that gives tax breaks to owners of corporate jets.

"I'm a capitalist, man. Make all the money you want. Just begin to pay your fair share of taxes," Biden said in remarks in Goffstown, New Hampshire, discussing his budget proposal.

None of the tax plans is going to pass the Republican-controlled House, particularly during an election year. But they allow Biden to contrast his economic agenda against Trump's in an appeal to working-class voters.

House Speaker Mike Johnson came out in opposition to the budget immediately, calling it a "roadmap to accelerate America's decline."

“The price tag of President Biden’s proposed budget is yet another glaring reminder of this administration’s insatiable appetite for reckless spending and the Democrats’ disregard for fiscal responsibility," Johnson said.

The Trump campaign warned that Biden's tax overhaul would lead to immediate job losses.

Protecting Medicare and Social Security

Biden, who regularly accuses Republicans of wanting to slash Medicare and Social Security, bolsters spending for both entitlement programs in his budget.

Each is a major driver of a federal deficit expected to increase by $19.5 trillion over the next decade.

The budget proposes a plan to extend the solvency of Medicare indefinitely by increasing the Medicare tax rate on Americans who earn more than $400,000 a year, closing various tax loopholes in existing Medicare taxes and directing revenue from the Net Investment Income Tax.

Like last year's budget, the White House has not proposed a similar plan to extend the solvency of Social Security but has outlined steady spending increases over the next 10 years and vowed to protect the program for seniors and disabled Americans. The 2025 budget would spend 6.2% more on Social Security than the current year.

"Social Security and Medicare Social Security and Medicare are more than government programs," said Shalanda Young, director of the Office of Management and Budget. "They're a promise ? a rock-solid guarantee that generations of Americans have counted on."

Biden and Democrats have long attacked Republicans by warning they can't be trusted to protect Medicare and Social Security. On Monday, the White House seized on remarks Trump made in an interview with CNBC in which the former president said, "There is a lot you can do in terms of entitlements, in terms of cutting."

Biden, speaking in New Hampshire, singled out Trump's remarks. "The bottom line is, he's still at it," Biden said. "I'm never gonna allow that to happen. I won't cut Social Security. I won't cut Medicare."

Billions for border security

Biden sought $13.6 billion in emergency funding from Congress last fall to manage the surge of arrivals at the U.S.-Mexico border. However, a bipartisan border security bill negotiated by the Senate was tanked by House Republicans at the request of Trump.

“Up to now, politics has intervened,” Biden said Monday in a speech to the National League of Cities. But, “we have to end the games.”

Biden’s budget proposal again calls for multiple measures to improve security and deal with immigration at the southern border.

The proposed budget includes $405 million to hire 1,300 additional Border Patrol agents to secure the border and $239 million for 1,000 additional Customs and Border Protection officers to stop fentanyl and other contraband from entering the country. It also proposes $755 million for hiring 1,600 asylum officers and support staff to timely handle immigration cases, and it includes another $849 million for cutting-edge technology to detect illicit drugs and other contraband at ports of entry.

In addition, Biden is asking for $1.3 billion to hire 375 new immigration judge teams to help reduce the backlog of immigration cases.

Biden is also proposing a $4.7 billion contingency fund that the Department of Homeland Security could tap into to boost security operations if there is a migrant surge at the southwest border. The fund would receive annual appropriations.

Child tax credit, aid for homebuyers and other cost-cutting measures for families

Biden proposes an expansion of the social safety net by offering several proposals to lower costs for families who are struggling financially.

Biden’s budget would restore the full child tax credit enacted in the American Rescue Plan, a $1.9 trillion economic stimulus package passed into law in 2021. Under the law, the maximum tax credit increased from $2,000 to $3,600 per child under age 6 and to $3,000 per child age 6 to 17. Congress allowed it to expire at the end of 2021.

Biden also is proposing a new program under which working families with incomes up to $200,000 per year would be guaranteed affordable, high-quality child care from birth until kindergarten. Under the proposal, most families would pay no more than $10 a day, while the lowest income families would pay nothing. The administration says the proposal would benefit the parents of more than 16 million children.

To help expand homeownership, Biden is proposing a new mortgage relief credit to help increase access to affordable housing. The proposal includes a new tax credit for middle-class, first-time homebuyers of up to $10,000 over two years. Biden is also calling on Congress to provide a one-year tax credit of up to $10,000 to middle-class families who sell their starter home.

And to lower health care costs, Biden has proposed making expanded premium tax credits from the Inflation Reduction Act permanent and providing Medicaid-like coverage to states that have not expanded Medicaid under the Affordable Care Act.

The budget builds on the administration's efforts to lower the cost of prescription drugs by accelerating the pace in which Medicare can negotiation directly with drug companies. The budget also proposes extending the $35 cap for a month's supply of insulin and expanding a $2,000 out-of-pocket cap on all prescription drugs beyond Medicare.

What happens next?

Biden’s spending plan now goes to Congress, which is in charge of writing the federal budget. Biden’s proposal will become the starting point for negotiations between lawmakers and the White House.

The Republican-controlled House is unlikely to go along with many of the president’s proposals, especially those to raise taxes on the wealthy, so when the final budget is passed, it is expected to look far different from the document that Biden proposed on Monday.

This article originally appeared on USA TODAY: Biden budget proposal: 5 takeaways from president's $7.3 trillion plan