President Joe Biden released his $6 trillion budget request to Congress for fiscal year 2022 and the ensuing decade.
The White House sent Congress a spending plan that would ramp up spending on infrastructure, education and combating climate change, arguing it makes good fiscal sense to invest now, when the cost of borrowing is cheap, and reduce deficits later.
The first comprehensive budget offered by Democratic President Joe Biden faces strong opposition from Republican lawmakers, who now want to reduce government spending and reject his plans to hike taxes on the rich and big corporations.
After racking up big bills for four years under GOP President Donald Trump, the Republicans are straining to revive their image of fiscal discipline and commitment to austerity now that Democrats are in charge.
Biden called for a 39.6 percent top capital gains tax rate that would apply to taxpayers with income of more than $1 million, in line with what had been previously proposed to help fund the American Families Plan.
Combined with a 3.8 percent Medicare surtax, the richest Americans would pay a 43.4 percent top rate on capital gains, the tax owed on assets like stocks, bonds, mutual funds and real estate that has grown in value. The wealthiest Americans currently pay a top federal tax rate of 20% on those returns, if the asset is held for more than a year.
Biden also proposed eliminating an existing tax break that allows appreciated assets to pass to heirs tax-free. Investors won’t necessarily avoid capital gains tax by holding until death if Congress approves the changes.
Reforms to the capital gains tax will raise about $322 billion over a decade, according to the White House.
“After four years of an administration whose signature legislative achievement was the largest wealth transfer to the rich in U.S. history, President Biden’s budget for fiscal year 2022 demonstrates a commitment to everyday Americans and to delivering on his promises, including to advance racial justice and meaningfully address the climate crisis,” said Robert Weissman, president of Public Citizen.
Biden’s plan for fiscal year 2022 calls for $6.01 trillion in spending and $4.17 trillion in revenues, a 36.6% increase from 2019 outlays, before the coronavirus pandemic bumped up spending. It projects a $1.84 trillion deficit, a sharp decrease from the last two years of Republican President Donald Trump’s wild spending, but up from 2019’s $984 billion.
Senate Budget Committee Chairman Bernie Sanders called Biden’s budget “the most significant agenda for working families in the modern history of our country,” and said it would create millions of good-paying jobs, while reducing poverty.
Senate Majority Leader Mitch McConnell heaped scorn on the plan, and warned Democrats to “move beyond the socialist daydream and the go-it-alone partisanship.”
“Where we choose to invest speaks to what we value as a nation. This year’s budget, the first of my presidency, is a statement of values that define our nation at its best,” said Biden.
“This is a great day for the commuters in New Jersey, New York and across the Northeast Corridor. After years of obstruction by the previous administration, the Hudson River Tunnel is one step closer to full approval,” said Rep. Donald M. Payne, Jr. “This project will help reduce rail congestion and allow thousands of commuters to get to their final destinations faster. It will provide desperately needed new infrastructure and ensure the reliability and efficiency of travel throughout the area.”
“The budget proposed by President Biden is a bold plan to move our country forward in the wake of the COVID-19 pandemic,” said Rep. Albio Sires (D-NJ). “America’s budget should reflect our nation’s values, and the proposal by President Biden does exactly that. This budget makes much needed investments in job training and clean energy, and includes funds to modernize our infrastructure by repairing over 20,000 miles of our public highways and rehabilitating the 10 most-used bridges across our country.”
Sires said Biden proposed, “a revolutionary investment in education, giving free universal pre-school for three and four year-olds, and two years of free community college. The President’s budget also includes much-needed assistance for parents with children by expanding the Child Tax Credit, providing support for child care, and the creation of a comprehensive paid family and medical leave program.”
“This is a budget that says, as a nation, we should do the things that make our country more just, fair, and prosperous — and that we know the richest nation in the history of the world, with historic levels of wealth and income concentration, can afford to do those things,” said Weissman. “That’s the right way to budget and it marks a break not just from Trump but from wrongheaded conventional wisdom going back decades. The sweeping $6 trillion proposals, if passed, will be a major boost to the nation’s infrastructure and substantially expand the social safety net. This budget proposal takes important steps to boost domestic spending in the manner we need in order to build back better and provide new investments in education, transportation, and fighting climate change.
“What is out of step in the budget is the $753 billion request for Pentagon. Withdrawing U.S. troops from the nearly 20-year war in Afghanistan should produce billions in cost savings and result in less money for the Pentagon, not more,” said Weissman. “As the budget now makes its way to Congress, appropriators must reallocate Pentagon excess away from military contractors and back into programs that meet true human needs.”