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Biden’s budget proposal: five things to expect


President Joe Biden will release his proposed budget on Thursday, paving the way for a showdown with Republicans in Congress over what the government should spend money on and how it should be funded.

The budget will serve as the basis for negotiations with the Republicans, who control the House of Representatives. The talks will be especially fraught as the budget is a flashpoint in the debt ceiling stalemate: Republicans have said if Democrats don’t agree to cuts, they won’t vote to raise the debt ceiling – which would lead to the default of government 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 the Medicare tax to be raised from 3.8% to 5% on revenues over $400,000, and for loopholes in existing taxes to be closed, the White House said Tuesday.

Biden also proposes expanding the number of drugs for which the program is allowed to negotiate prices with manufacturers, potentially lowering costs for beneficiaries and lowering out-of-pocket costs for chronic disease drugs.

Together, the changes would allow the trust fund that funds Medicare — the government’s health insurance program for senior citizens — to run for another 25 years, the White House said. The fund is expected to mature in 2028.

Taxes on billionaires

Biden has called for new taxes on the wealthiest Americans, including a “minimum income tax for billionaires”. Under Biden’s plan, which he laid out last year, people worth more than $100 million would have to pay taxes when the value of their assets increased, not just when they are sold, as the capital gains tax now requires.

Biden reiterated his call for this tax in his State of the Union address in February.

Quadruple the tax on share buybacks

Biden also called for a quadrupling of the 1% tax shareholders pay when companies buy back their own shares. The share buyback tax was introduced in 2022 as part of the Inflation Reduction Act.

Social Security and Medicare benefits would remain intact

In the February State of the Union, Biden said he would not cut the government’s largest benefit programs.

“I will not cut any Social Security or Medicare benefits,” he said.

Biden’s vision clashes with Republican proposals

The day after the speech, the House Republican Budget Committee released a list of proposed cuts, including scrapping Biden’s student loan forgiveness plan, which is on hold while the Supreme Court considers whether to proceed; cutting Obamacare benefits; and eliminating several other government programs.

Last year, a group of Republican lawmakers created their own budget schedule to balance the federal budget by cutting spending on Social Security, Medicare and a host of other programs.

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.