Biden will pitch tax hikes in annual budget

WASHINGTON — President Biden will propose new tax increases in his upcoming budget plan, which he also says will shave $3 trillion off the federal deficit over the next 10 years, the White House confirmed Wednesday.

Biden, 80, will unveil the full pitch ahead of a trip to Philadelphia Thursday — though the proposal is dead on arrival in Congress, where Republicans who oppose tax increases control the House of Representatives.

That means the most contentious policy ideas will serve as political rhetoric rather than legislative reality.

Press secretary Karine Jean-Pierre told reporters Biden’s budget plan would reduce the deficit “while lowering costs for families, investing in America and protecting programs Americans have paid into, because it proposes tax reforms to ensure the wealthy and large corporations pay their fair share while cutting wasteful spending on special interests like the oil [industry] and Big Pharma.”

Jean-Pierre was coy about details and deflected questions about a reported 5.2% pay increase for federal workers — which would be the largest since the Carter administration — and a 20% minimum tax on both income and unrealized gains of liquid assets, like stocks, that would apply to individuals and families worth more than $100 million.

The White House teased one of the tax proposals Tuesday — outlining a plan to hike Medicare taxes from 3.8% to 5% on those with income above $400,000 per year.

The Medicare tax hike also would close a loophole that Biden himself exploited in 2017 and 2018 to avoid paying up to $500,000 in Medicare taxes by routing much of his income, including speaking fees and book-sale proceeds, through what’s known as an S corporation.

Biden may also resurrect proposals to boost the top personal income tax rate to 39.6%, from its current 37%, while upping corporate taxation from 21% to 28%.

Senate Minority Leader Mitch McConnell (R-Ky.) told reporters in response to the mooted budget that “thank goodness the House is Republican.”

“Massive tax increases, more spending. All of which the American people can thank the Republican House for will not see the light of day,” McConnell said.  

Jean-Pierre didn’t specify which year the White House was using to compare projected deficits against and faced skeptical questions from reporters who pointed out that the $31.6 trillion national debt would continue to grow under the plan.

“Trillions of dollars will be added to the national debt,” noted NPR reporter Tamara Keith, who asked about criticism that such a plan “doesn’t go far enough” in addressing the mounting arrears.

About 14% of federal spending currently goes toward maintaining the debt.

Jean-Pierre countered that the Trump administration “added $3 trillion, or $2 trillion to the debt” with its 2017 tax cuts, which conservatives argue spurred economic growth, resulting in greater tax revenue.

Biden and House Republicans are locked in a fiscal dispute — with House Speaker Kevin McCarthy (R-Calif.) demanding spending cuts before agreeing to raise the US debt ceiling later this year.

Biden has sought to deflect GOP demands by asking for specific proposals on cuts.

In recent months, Biden has sought to portray himself as an exemplar of fiscal responsibility — despite enacting massive new spending that critics, including Democratic economists, say unleashed the worst inflation since the early 1980s.

Biden regularly claims in error that he has reduced the national debt by conflating the term “deficit,” which means the annual shortfall in federal funding, with the cumulative “debt.”

“You know you hear ads with the big-spending Joe Biden?” Biden said last month.

“In two years, I reduced the debt $1.7 billion.”

“I want to make it clear, I’m going to raise some taxes,” the president said in the same speech, previewing his budget proposal.

“If any of you are billionaires out there, you’re going to stop paying at 3%, not a joke.”

Although Biden regularly notes that the deficit is getting smaller, a CNN article last year noted much of the reduction is due to the expiration of COVID-19 pandemic relief programs rather than Biden’s own actions.

The national debt has increased by about $3.85 trillion since Biden took office.

It grew by about $7.8 trillion during former President Donald Trump’s four years in office, which included massive bipartisan COVID-19 packages.

The deficit, meanwhile, hit an all-time annual high of $3.13 trillion in 2020 before dipping to a still-staggering $2.77 trillion in 2021 when Biden took office.

The fiscal 2022 deficit was $1.38 trillion — still the fourth-highest on record.

Biden’s spending packages have included the $1.9 trillion stimulus bill passed in early 2021 and last year’s $739 billion environmental and healthcare bill, both passed without any Republican support.

He also signed a $1.2 trillion bipartisan infrastructure law, the $280 billion bipartisan CHIPS and Science Act and a $270 billion veterans healthcare bill.

Democratic economic adviser Steven Rattner branded Biden’s $1.9 trillion stimulus law the “original sin” of the inflation crisis.

“The bill — almost completely unfunded — sought to counter the effects of the Covid pandemic by focusing on demand-side stimulus rather than on investment. That has contributed materially to today’s inflation levels,” wrote Rattner, who managed the Obama Treasury Department’s auto industry bailout.

Another Democratic economic adviser, Larry Summers, who worked as President Barack Obama’s top White House economist and as President Bill Clinton’s treasury secretary, tried to warn against massive spending in early 2021, writing in an op-ed that Biden’s stimulus bill could “set off inflationary pressures of a kind we have not seen in a generation.”

“There’s an element in this that the secret sauce of economics is arithmetic,” Summers reflected in a July podcast interview with Politico.

“And there were many people in the debate who didn’t do arithmetic… and they thought more stimulus was good, so more stimulus was better, and they didn’t think too much stimulus was really possible.”