Biden’s Top Economic Aides Attempt To Defend ‘Staggering’ $7.2 Trillion Budget on Capitol Hill

President Biden’s top aides are kicking off what will be a brutal spending fight this year, traveling to Capitol Hill Thursday to push the administration’s historic spending proposal. The aides went to defend what Republicans are calling a “staggering” $7.2 trillion proposal that does nothing to address the debt or deficit while funding new social programs through tax increases on the rich and corporations. Secretary Yellen and the director of the Office of Management and Budget, Shalanda Young, told congressional committees that tax increases associated with the expansive budget proposal will not affect the average American. “GDP growth is strong, inflation has come down significantly, and the labor market is remarkably healthy,” Ms. Yellen told members of the Senate Finance Committee. “Real wages and household median wealth have increased since before the pandemic.”The top Republican on the committee, Senator Crapo, called the proposal “staggering.”“As expected, it was filled with familiar, partisan tax-and-spend proposals, doubling down on an agenda that was rejected even when the Democrats had majorities in both the House and the Senate,” he said. “The president proposes nearly $5 trillion in new and increased taxes. Tax increases of that magnitude will affect all Americans through lower paychecks and higher household expenses.”The 2025 budget proposal would be the largest budget in American history, outpacing both wartime and recession spending. This year’s budget, if approved as is and extended in the coming years in the same or similar form, would already cost more than $80 trillion over the course of a decade — nearly one-quarter of gross domestic product over that same time period. It is unclear what this 2025 proposal would cost between now and 2034. Since the first quarter of 2017 when President Trump took office, America has added more than $15 trillion to the national debt. As a share of GDP, the debt stayed level at around 105 percent through Mr. Trump’s term until the Covid pandemic, when that shot up to more than 130 percent. Since the beginning of his term, Mr. Biden has only been able to bring the debt down to just more than 120 percent as a share of GDP. Mr. Biden has added his own share to the debt through spending on clean energy programs and student debt relief. On Thursday, Ms. Yellen touted the $650 billion in clean energy and manufacturing investments made by the administration since the beginning of 2021. On the same day, Mr. Biden announced that he would be forgiving $6 billion in student loans for more than 750,000 Americans. A key pillar of Mr. Biden’s budget proposal is instituting a 25 percent minimum tax on billionaires’ incomes in order to prevent the ultra-wealthy from paying lower rates than salaried and hourly laborers. “Billionaires make their money in ways that are often taxed at lower rates than ordinary wage income, or sometimes not taxed at all, thanks to giant loopholes and tax preferences that disproportionately benefit the wealthiest taxpayers,” the White House said in a statement. “As a result, many of these wealthy Americans are able to pay an average income tax rate of just 8 percent on their full incomes — a lower rate than many firefighters or teachers.”Part of Mr. Biden’s new “billionaire tax” would include taxing unrealized gains for households with a net worth of $100 million or more — something he has proposed before and that has been rejected by Republicans and Democrats in Congress alike. Ms. Yellen defended the proposal to tax unrealized gains during her appearance before the Finance Committee on Thursday. The chairman of the committee, Senator Wyden, described the capital gains-as-income proposition as “buy, borrow, and die.”“Buy, borrow, and die is a glide path for billionaires to pay little or nothing in tax for years on end,” the chairman said. “Under current law, some of the wealthiest Americans pay very little tax because they receive their income as capital gains, and those capital gains aren’t taxed until realized and may escape income taxation entirely at death,” Ms. Yellen said. “The president’s budget would impose a minimum tax of 25 percent on total income, inclusive of unrealized capital gains. It would apply to the wealthiest one-hundredth of a percent of taxpayers.”According to the Committee for a Responsible Federal Budget, this tax increase and others would do little to close the budget deficit or bring down the national debt as a share of GDP. In total, the debt would increase by nearly $18 trillion in the next decade, which would level out at about 106 percent of GDP. The budget deficit would reach nearly 4 percent of GDP by 2034. The tax increases are meant to pay off the president’s large social spending programs here at home, including tax breaks for children, laborers, and new homeowners. Ms. Young, speaking to a Republican-led House committee, said the investments would help spur economic growth. “The president’s 2025 budget details the president’s vision for a more equitable, prosperous, and powerful America with proposals for responsible pro-growth investments in the American people,” she said to members of the Budget Committee. Republicans on the panel weren’t having Ms. Young’s pitch, though. “I’m wondering when you and my Democratic colleagues are going to learn that you cannot spin the economy,” Congressman Tom McClintock said, arguing that the budget proposal is a campaign pledge to appease interest groups, not a serious economic program for America. “Everybody knows in their own lives how they’re doing and if you try to spin them, you just end up looking foolish.”Selling the budget to a Republican House was always dead on arrival for Mr. Biden. Even the Democratic-controlled Senate wouldn’t stomach some of these same tax hikes back in 2021 and 2022.“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,” the House Republican leadership team said in a joint statement when the budget was first released. “Biden’s budget doesn’t just miss the mark — it is a roadmap to accelerate America’s decline.”

Biden’s Top Economic Aides Attempt To Defend ‘Staggering’ $7.2 Trillion Budget on Capitol Hill

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