On March 9, President Biden unveiled a summary of his fiscal year 2024 budget request, which covers broad spending categories and includes projections for major entitlement programs, such as Social Security, Medicare and Medicaid. The budget request calls for nearly $1.7 trillion in discretionary federal spending, a roughly five percent increase over last year’s budget. This includes over $688 billion for non-defense domestic programs (a seven percent increase), $886 billion for defense-related programs (a three percent increase), and $121 billion for Veterans Affairs programs.
On the revenue side, the budget request proposes a new 25 percent tax on billionaires, as well as an increase in the corporate tax rate (from 21 percent to 28 percent), and an increase in the tax on stock buybacks (from 1 percent to 4 percent). According to the administration, these reforms would reduce the deficit by nearly $3 trillion over the next decade.
In addition, the proposal would increase the Medicare tax rate for Americans making more than $400,000, a prospect that would extend the life of Medicare by at least 25 years. It also would close a loophole that has shielded some business owners and high-income earners from paying the tax at all. Finally, the budget would allow Medicare to negotiate the cost of more prescription drugs, resulting in an estimated $200 billion in savings.
Aside from the proposed new taxes, the Biden administration is calling on Congress to restore the popular expanded Child Tax Credit that expired in 2021. The framework also includes funding for a federal-state partnership aimed at expanding free pre-school and revives legislative proposals aimed at providing national paid leave and free community college.
Given the divided Congress and highly-charged political climate ahead of next year’s presidential election, the administration’s budget plan will serve as more of a symbolic representation of the president’s policy priorities than the actual starting place for upcoming spending decisions. Indeed, the job of crafting the fiscal year 2024 budget – which is comprised of 12 separate funding measures – is the responsibility of the House and Senate Appropriations Committee.
