An election program disguised as a draft budget: US President Joe Biden revealed his plans for the 2024 budget and election year in a speech on Thursday.
The proposal presented by the Democrat will never make it through Congress in this form, now that the Republicans have regained control of the House of Representatives since the beginning of this year. But that was not the intention of Biden’s announcement. The general expectation is that the president will run for a second term in 2024. His budget plan mainly served as a sharp political contrast to the economic ideas of the Republican opposition. Biden therefore did not give his speech from the White House, but in Philadelphia, in the electorally crucial state of Pennsylvania.
Trump’s tax cut scrapped
Against this political background, Biden launched a plan to cut $3 trillion over a ten-year period and increase the burden on the very wealthy, hedge funds, multinationals and other large companies. The extra budgetary space that this would free up should benefit health care for the elderly and lower income groups, but also, for example, continued military support for Ukraine and NATO.
On the revenue side, Biden’s budget sharply opposes the Republican ‘trickle-down ideology’: the idea that tax relief for the rich ‘trickles down’ to lower economic classes and thus leads to growth. His Republican predecessor Donald Trump introduced a major tax reform that above all benefited the elite and further increased the national debt. “President Biden has always said that growth should come from the bottom and the middle, not from the top,” the White House said in an accompanying letter on Thursday.
Biden promises to increase the burden on the rich. He would reverse Trump’s tax credit for Americans earning more than $400,000 a year. A minimum rate of 25 percent should apply to billionaires. He would tax income returns above a million dollars more heavily. And a loophole in the tax law that is often used by venture investors he would like to close.
Companies should also pay more. Corporate tax should be raised to 28 percent; US multinationals would have to pay a rate of 21 percent (currently 10.5 percent) on overseas profits; and the practice of companies buying back their own shares should also be taxed four times as heavily.
The need to position his budget plan as fiscally prudent is all the more pressing for Biden as Washington prepares for a battle over the so-called debt ceiling. In the ritual negotiations on this, the Republicans threaten to use their House majority to lock down the federal government if necessary or – even more risky – to have the US labeled a defaulter. The opposition party thereby portrays Biden in the public image as a left-wing spender who drives inflation with even more unnecessary investments of billions.
The Republicans dismissed Biden’s proposals on Thursday as “a joke” and “reckless” and “wasteful”. The opposition party itself has not yet submitted an alternative budget, but seems to be betting that Biden is electorally vulnerable after all. Opinion polls show that voters are suspicious of his economic policies as inflation remains stubbornly high and the central bank will likely have to tighten monetary policy for longer and more radically with interest rate hikes.
There was also good news for Biden on Friday. The employment figures from the Ministry of Labor for the month of February were more favorable than analysts had expected. The US economy added 311,000 net jobs.
A version of this article also appeared in
the newspaper of March 11, 2023