President Joe Biden is set to release his proposed budget on Thursday, setting the stage for a confrontation with Republicans in Congress over what the government should spend money on and how it should be funded.
The budget will serve as a starting point for negotiations with Republicans, who control the House of Representatives. The talks will be especially fraught because the budget is a flashpoint in the standoff over the debt ceiling: Republicans have said that if Democrats don't agree to spending cuts, they won’t vote to raise the debt ceiling—which would lead to the government defaulting on its debts and a potential economic catastrophe, economists predict.
Here are five things to expect:
A new tax on high-earners to fund Medicare
Biden will call for raising the Medicare tax to 5% from 3.8% on income over $400,000, as well as to close loopholes in existing taxes, the White House said Tuesday.
Biden also proposes expanding the number of drugs for which the program will be allowed to negotiate prices with manufacturers, potentially lowering costs for beneficiaries, as well as cutting out-of-pocket costs for medications for chronic conditions.
Together, the changes would allow the trust fund that funds Medicare—the government health insurance program for seniors—for another 25 years, the White House said. The fund is projected to run out in 2028.
Taxes on billionaires
Biden has called for new taxes on the wealthiest Americans, including a “billionaire minimum income tax.” Under Biden’s plan, which he laid out last year, people worth more than $100 million would have to pay a tax when the value of their assets increased, not just when they are sold, as the capital gains tax requires now.
Biden renewed his call for this tax in his State of the Union address in February.
Quadrupling tax on stock buybacks
Biden also called for quadrupling the 1% tax that shareholders pay when companies repurchase their own stock. The stock buyback tax was introduced in 2022 as part of the Inflation Reduction Act.
Social Security and Medicare benefits would remain intact
In February’s State of the Union, Biden said he wouldn't make cuts to the government’s biggest benefit programs.
“I won’t cut a single Social Security or Medicare benefit,” he said.
Biden’s vision clashes with Republican proposals
The day after the speech, the House Republican Budget Committee released a list of proposed budget cuts, including scrapping Biden’s student loan forgiveness plan, which is on hold while the Supreme Court considers whether to allow it to proceed; cutting Obamacare benefits; and eliminating various other government programs.
Last year, a group of Republican lawmakers created their own budget outline to balance the federal budget by reducing spending on Social Security, Medicare, and cutting numerous other programs.