Yesterday Joe Biden released his budget proposals for the next fiscal year. In the ritualistic role-playing that is the annual budget process in the US, a president’s proposals are taken seriously as likely to be implemented only if the president’s party controls both houses of Congress. Otherwise, the opposition party that is the majority will dismiss the proposals outright. Those are the usual opening moves in this dance and it is being followed this time with Republican speaker Kevin McCarthy and others in his party’s leadership dismissing the budget.

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.

McCarthy’s statement looked like it might have been written well in advance since he accuses the Biden budget of ignoring the national debt when in fact Biden argues that his budget will lower it by $2.9 trillion over the next ten years. The precise numbers are always subject to debate but it is incorrect that Biden is ‘ignoring’ it when it is the top line item.

That does not mean that this is a wasted exercise. The president’s proposals should be viewed as more like a campaign platform, especially so since next year will be a presidential election year. Progressives have reserved their criticisms mostly to the absurdly high military allocation while generally praising the budget,

Biden advocates for $59 billion in funding and tax incentives to increase the affordable housing supply; $10 billion to remove barriers to affordable housing developments; and $10 billion to address racial and ethnic homeownership and wealth gaps. The president proposes providing $4.1 billion for the Low Income Home Energy Assistance Program—and allowing states to use some of that money to provide water bill assistance to poor households, since a related program expires at the end of 2023.

Along with fighting for billions of dollars to ease hunger, the administration aims to pour money into high-poverty school districts as well as improve the affordability of higher education by increasing the discretionary maximum Pell Grant by $500, expanding free community college, and subsidizing tuition for students from families earning less than $125,000 enrolled historically Black, tribally controlled, or minority-serving institutions.

“Time and again, President Joe Biden delivers on his promise to fight for American families, his commitment to fairness for all Americans, and his belief that everyone should have the freedom and opportunity to build a better life. This budget reflects those priorities and values by helping people continue to rebuild,” said American Federation of Teachers President Randi Weingarten, who highlighted various proposed investments in education and major federal programs.

The budget lays out what Biden’s priorities are, to contrast with what Republicans may eventually propose. Eventually, there will have to be some compromise to get some budget spending bills passed so that the government can function. I suspect that given how beholden McCarthy is to his extremist members, the compromise may be a continuing resolution, where the current year’s spending is continued to the next year.

This article provides more detail on what Biden is proposing. There is a lot to like in it.

As political gridlock puts the government at risk of defaulting, President Joe Biden on Thursday made an opening bid with a budget plan that would cut deficits by $2.9 trillion over the next decade – a proposal that Republicans already intend to reject.
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In addition to deficit reduction, Biden’s 10-year budget largely revolves around the idea of taxing the wealthy to help fund programs for the middle class, older adults and families. It would raise $4.7 trillion from higher taxes, with an additional $800 billion in savings from changes to programs.

The tax increases include a reversal of the 2017 tax cuts made by President Donald Trump on people earning more than $400,000 a year.

Biden has floated a new 25% minimum tax on households worth $100 million or more. Also, the tax that companies pay on stock buybacks would rise fourfold and those earning more than $400,000 would pay an additional Medicare tax that would help to keep the program solvent beyond the year 2050. Medicare could negotiate on the prices of more prescription drugs, helping to save the government money.

Accompanying that would be $2.6 trillion worth of new spending, including the restoration of the expanded child tax credit that would give families as much as $3,600 per child, compared with the current level of $2,000. That credit would be “fully refundable,” which means households could receive all of that sum even if they don’t owe any taxes. The budget proposal would impose a $35-a-month cap on insulin prices, matching a change that Biden already put in place for Medicare recipients.
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The budget would seek to close the “carried interest” loophole that allows wealthy hedge fund managers and others to pay their taxes at a lower rate, and prevent billionaires from being able to set aside large amounts of their holdings in tax-favored retirement accounts. The plan also projects saving $24 billion over 10 years by removing a tax subsidy for cryptocurrency transactions.
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Biden’s proposal would increase the top marginal tax rate to 39.6% on income above $400,000. For households with $1 million in income, earnings from capital gains, such as stocks or property sales, would no longer enjoy a discounted tax rate compared with wages. The president would increase the corporate tax rate to 28% and increase the tax rate on U.S. multinationals’ foreign earnings from 10.5% to 21%.

So now the ball is in the Republicans court to come up with an alternative budget. They have been stalling for the longest time because they realize that they are in a bind.

[Speaker Kevin] McCarthy has called for putting the U.S. government on a path toward a balanced budget. But by refusing to raise taxes or cut Social Security and Medicare spending, GOP lawmakers face some harsh math that makes it hard to reduce deficits without risking a voter backlash before a presidential election.

As usual when Republicans do not control the presidency, they are making a big song-and-dance about the need to reduce the debt and threatening to not raise the debt ceiling, something they never do when a Republican is president. They can claim that Biden’s budget does not cut the deficit enough and that he should go further but in the absence of any concrete alternative proposals of their own, that would be a hollow charge. They undoubtedly hate the proposed increased taxes on the wealthy and corporations but eliminating those only makes their job of coming up with a budget harder.

After successfully needling them during his state of the union speech to get them to loudly oppose cuts to Social Security and Medicare, Biden is taunting them to come up with something, once again reminding voters of past Republican attempts to cut Social Security and Medicare, and promising to block any attempts to do so again.

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.

It seems like Biden is relishing the prospect of having this fight with Republicans.

McCarthy will stall as long as he can but with the debt ceiling reaching a crisis around June, he will have to come up with something before then that will please the extremists in his caucus as well their Dear Leader Donald Trump.