“Where you spend your money says a lot about your values.” – Al Franken
President Joe Biden has unveiled his proposed budget for the 2025 fiscal year, and politics, being what they are, an editorial in the Washington Post rightly explained it has “zero chance” of becoming a reality.
Still, what Biden wants to do and the plans of Republicans in Congress and his opponent – four-time-indicted/twice-impeached/sexual assaulter/tax fraudster/former President Donald Trump – need to be understood and contrasted so every voter can understand the stark differences in the agendas of both parties and the economic realities that go with them.
In summary, Biden wants to increase taxes on the wealthy and corporations to help pay for programs for people in need and lower the projected future budget deficit, while Trump would continue the tax cuts from his beloved 2017 Tax Cuts and Jobs Act, which would help ensure our continued wealth gap and add millions to the deficit.
Don’t believe me? Let’s take a look.
We’ll start with Biden’s $7.3 trillion proposed budget. It includes about $5 trillion in new taxes on corporations and the wealthy over a decade. Americans earning less than $400,000 a year would get tax cuts totaling about $750 billion. It also includes about $3 trillion in new measures to reduce the federal deficit over the next decade.
Here are some of Biden’s ideas for increasing taxes on the wealthy and corporations:
*Establishing a 25-percent minimum tax on people with a net worth of over $100 million. This would include their appreciated assets, which are not currently taxed.
*Increasing the corporate income tax rate from 21 to 28 percent. (The 2017 Tax Act cut it from 35 to 21 percent.)
*Increasing the minimum tax rate on billion-dollar corporations from 15 to 21 percent.
*Quadrupling the tax on stock buybacks. (Remember how corporations used a lot of their tax windfall to do stock buybacks instead of allowing it to “trickle down” to their workers – more on that con later.)
*Taxing capital gains at the same rate as wage income for those earning more than $1 million a year.
*Reducing incentives for multinational businesses to book profits in low-tax jurisdictions and raising the tax rate on foreign earnings from 10.5 percent to 21 percent.
*Preventing some corporations from taking deductions for compensation over $1 million paid to any employee. This is an attempt to discourage companies from giving their executives massive pay packages.
*Restoring the full $80 billion investment in the Inflation Reduction Act to modernize and ramp up enforcement efforts on the wealthy. Last June, a deal to address the debt ceiling rescinded $20 billion of that funding.
As for spending, Biden has some big ideas. To name a few, he wants to establish a national paid family and medical leave program, reduce child-care costs, invest in clean energy jobs and infrastructure, fund voluntary universal pre-K and Head Start, and extend Affordable Care Act subsidies and coverage for children
Here are some others:
*Extend the $35 monthly cap on out-of-pocket insulin costs, the $2,000 annual out-of-pocket limit on prescription drug costs, and rebates on drugs whose prices rise faster than inflation from Medicare to the commercial insurance market.
*Temporarily restore the expanded child tax credit contained in the 2021 American Rescue Plan for one year, which cut child poverty almost in half when it was in effect. This is projected to lift three million children out of poverty and cut taxes by an average of $2,600 for 39 million low- and middle-income families involving 66 million children.
*Increase the earned income tax credit for workers without dependent children.
*Expand rental assistance for low-income families and provide incentives to address the existing shortage of affordable housing in the country. Invest more than $258 billion in the building and renovation of more than 2 million homes.
*Provide $90 billion over 10 years to make two years of community college free for eligible students through a federal-state partnership. Expand the Pell grant program, which helps low-income students pay for college, increasing the current maximum amount of $7,395 by $750.
*Increase border security with $13.6 billion of new funding to address migration at the southern border.
Here’s a New York Times story on Biden’s budget.
Here’s a summary from CNN.
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Naturally, Republicans hate the president’s proposed budget.
Speaker Mike Johnson characterized the it as “yet another glaring reminder of this administration’s insatiable appetite for reckless spending and the Democrats’ disregard for fiscal responsibility,”
Just so we’re clear, this is from the speaker of a party that added almost $8 trillion to the deficit in four years under Trump, including $2 for a tax cut primarily favoring the rich and corporations. In what world is that not an “insatiable appetite for reckless spending” and a “disregard for fiscal responsibility.”
What’s the Trump/GOP plan?
The New York Times reported that House Republicans have released a proposed budget aimed at reducing deficits faster and balancing the budget by the end of the next decade. Here’s the problem: “their savings relied on economic growth forecasts that are well above mainstream forecasters’ expectations, along with steep and often unspecified spending cuts.”
Please allow me explain: They’re lying about the economic growth that would result from their tax cuts, and they want to eliminate the social safety net as much as possible, possibly cutting Social Security and Medicare. When they don’t tell you what they want to cut, bet the house it’s something that helps people who aren’t as well off as them and their rich donors.
You can read more about the GOP plan in this story from Yahoo News.
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The previously mentioned Post editorial is titled, “Biden’s Budget is a lot more realistic than Trump’s on taxes,”
“The short version is that Mr. Biden’s tax plan would be fairer and more fiscally responsible than Mr. Trump’s,” the editorial said. “The longer version is: Despite this reality, the country needs a reckoning on its unsustainable budgetary path and Mr. Biden’s proposals, thought better than the alternative, do not envisage one.”
That’s fair. Democrats as a whole are much more willing to spend money than Republicans. One reason is their goal is to help people in need, while Republicans in general don’t care about those folks. Another reason Republicans oppose the Left’s policies is because they have the opposite goal: shrinking government to offset big tax cuts for the rich and corporations.
While Biden wants to raise taxes on the rich and corporations, Trump and the GOP want to extend the personal tax cuts in their 2017 Tax Act. They’re set to expire at the end of next year, while the corporate tax cut stays in place.
Back in 2017, these tax cuts were projected to add $2 trillion to the deficit over 10 years. Extending them would cost $3.3 trillion over the next decade, “with no realistic plan yet to pay for it,” the Post said.
So, to compare, Biden wants to increase taxes on the rich and corporations, which would lower our future debt by about $3 trillion over 10 years – to be fair, we’d still face about $13 trillion added to our total during that period -- while Trump wants to add about $3 trillion our deficit by cutting taxes on the rich and corporations, the same deficit the Republican Party likes to wring its hands about when a Democrat is in the White House.
You can read the Post’s editorial here.
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If you’re still here, thanks for hanging in there. I promised to come back to the GOP’s trickle-down lie. The argument is well-stated in a Post opinion column by Jennifer Rubin titled, “‘Trickle-down economics’ is a scam that ignores decades of evidence.”
“The claimed economic benefits of tax cuts for the rich don’t stand up under scrutiny,” Rubin wrote. “Actually, we have seen a steady stream of evidence debunking this rationale.”
One is a 2020 study by two London economists who examined 18 developed countries over a 50-year period and found that “per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn’t.”
Here’s an even bigger finding: “The incomes of the rich grew much faster in countries where tax rates were lowered. Instead of trickling down to the middle class, tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality, the research indicates.”
The report found that the GOP’s 2017 tax cuts “have lifted the fortunes of the ultra-rich. For the first time in a century, the 400 richest American families paid lower taxes in 2018 than people in the middle class.”
They also found that after the tax bill became law wages for average Americans didn’t keep up with the cost of living, and that “even before the pandemic, income inequality had reached its highest point in 50 years,” according to U.S. census data.
In a 2022 update of their report, the two experts wrote that there’s “strong evidence that cutting taxes on the rich increases income inequality but has no effect on growth or unemployment.”
“There’s a solid, empirical body of research confirming this” according to Jared Bernstein, chair of the Council of Economic Advisers. “Tax cuts for the rich just make them richer, exacerbating both the deficit and economic inequality,”
You can read Rubin’s piece here.
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Look, I understand Biden’s budget is really a Democratic wish list. Still, it clearly illustrates the differences between the two parties when it comes to taxes and spending priorities.
The president isn’t going to get everything he wishes for, but here’s hoping one wish for many of us comes true:
That Biden is returned to the White House for another term.
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