Biden's Budget Promises Deficit Cut, But His Inflation Reduction Act's Massive Cost Overruns Cast Doubt
President Joe Biden is nothing if not a tax-and-spend liberal, and his latest budget proposal is further proof of it.
A centerpiece of his 2025 fiscal year budget is a plan to reduce deficit spending by $3 trillion over the next 10 years, but given the cost overruns of Biden’s 2022 Inflation Reduction Act, which also was supposed to reduce the deficit, don’t take the administration’s numbers to the bank.
Biden tried to trumpet his deficit-cutting bona fides on Monday in a speech in Washington, D.C., saying, “We reduced the federal deficit. … It hasn’t gone up. It’s gone down under us.”
“We cut it by $1 trillion already — another trillion over the next decade,” he continued. “And that’s my goal: to cut [it] by $3 trillion by making the wealthy and big corporations finally begin to pay their fair share.”
President Biden: “If you can make a billion bucks – wonderful, just pay your fair share man, not 8.2%.”
President Biden delivered remarks on his 2025 budget at the National League of Cities in DC, Monday.
A White House official said the budget would cut taxes for millions of… pic.twitter.com/H63eRwCVOX
— The Hill (@thehill) March 11, 2024
The president has been fact-checked multiple times over his claims that he brought the deficit down over $1 trillion, including most recently when he said so during his State of the Union address on Thursday.
Biden is using as his baseline the $3.13 trillion deficit in 2020, when, on an overwhelmingly bipartisan basis, Congress passed emergency funding measures in response to the coronavirus pandemic.
The following year, his first in office, the deficit remained at a historic high of $2.78 trillion, thanks in large part to the Democrats’ $1.9 trillion American Rescue Plan, passed in the spring of 2021.
Finally, as pandemic-related spending peeled off, the deficit came down to $1.38 trillion in 2022, but was back up again last year to $1.7 trillion. It is expected to come in at around $2 trillion for the current fiscal year.
The increase is due in part to new spending measures approved during Biden’s first two years in office, including the infrastructure bill passed in November 2021 with a price tag of $1 trillion.
But the Inflation Reduction Act, passed in August 2022, is even more to blame. The updated cost of its climate and energy provisions alone has skyrocketed from a projected $385 billion to approximately $1 trillion.
The IRA, a scaled-down version of Biden’s Build Back Better proposal, raised taxes on corporations, which the administration said would result in $300 billion in new revenue over a decade.
The problem is that the “green” initiatives included in the IRA gobbled up the new revenue and then some, Bloomberg reported.
All of Biden’s new spending programs will add $6 trillion to the national debt over a 10-year period, according to The Heritage Foundation’s Stephen Moore.
#1 – Joe Biden’s State of the Union Lies:
“My administration cut the deficit by $1.7 trillion.”
The truth: Biden has added $6 trillion to the debt since he took office. pic.twitter.com/bIewFnphhC
— Stephen Moore (@StephenMoore) March 8, 2024
So when the president talks about cutting the deficit while also raising taxes on corporations and the wealthy to supposedly pay for new spending initiatives, buyer beware.
And that’s exactly what his 2025 budget does.
New programs include bringing back the expanded COVID-era child “tax credit” with direct deposits of as much as $300 per child per month, CBS News reported.
Additionally, Biden’s budget would create a new entitlement program to pay most of the costs of child care from birth until kindergarten for families earning less than $200,000. The administration also wants to give $10,000 tax credits (read: payments) to first-time home buyers.
USA Today reported that Biden’s overall budget cost comes in at a whopping $7.3 trillion, which represents a 4.7 percent increase from last year.
By comparison, federal outlays under former President Donald Trump in 2019, pre-COVID, totaled $4.4 trillion. So Biden wants to spend nearly $3 trillion more per year than his predecessor did.
And the country is clearly not in a good place to do it.
Revenue to the federal treasury last year was $4.44 trillion. So if we could just dial back spending to pre-pandemic levels, the budget would be close to balanced. But Biden’s administration spent $6.13 trillion in 2023.
The deficit as a percentage of the nation’s gross domestic product also remains at historically high levels under Biden — 6.2 percent in 2023 versus 4.6 percent in 2019 under Trump.
The St. Louis Federal Reserve Bank has charted the annual percentage going back to 1930, and save three crisis moments — World War II, the 2008 financial meltdown and COVID — the figure has never been higher.
So how does Biden propose to pay for all these programs and reduce the deficit? By making those darn corporations and rich people finally pay their “fair share.”
His plan is to raise the corporate tax from 21 percent to 28 percent, giving the U.S. one of the highest tax rates in the world for businesses.
New from @danieldbunn and @GS_Watson: The U.S. effective corporate tax burden is close to or above average compared to OECD peers. Raising it would put the U.S. at a competitive disadvantage, whether looking at statutory or effective corporate tax rates. https://t.co/nGN4ojHFVJ pic.twitter.com/KouoiFozOx
— Erica York (@ericadyork) April 2, 2021
Biden also wants to increase the top personal income tax rate from 37 percent to 39.6 percent for those earning over $400,000, up the capital gains tax rate on investments from 20 percent to 36.9 percent for those earning over $1 million, and hit those earning $100 million or more with a 25 percent minimum wealth tax.
Moore noted that the top 1 percent of Americans are already paying a historically high 46 percent of the total federal tax revenue. Meanwhile, the bottom 50 percent of wage earners (those earning approximately $46,600 or less) are paying just 2.3 percent of the total.
So it’s tough to argue the wealthy are not paying their “fair share,” except for perhaps Biden’s son Hunter, who currently faces tax evasion charges to the tune of $1.4 million.
#2 – Joe Biden’s Top State of the Union Lies:
“We will make the rich pay their fair share.”
The truth: The top 1% of American tax filers already pay an all-time record high 46% of taxes. pic.twitter.com/hcFgfIlxMo
— Stephen Moore (@StephenMoore) March 11, 2024
Former Trump economic adviser Larry Kudlow hammered Biden’s budget on his Fox Business program Monday, saying the president can’t “tax the country into prosperity.”
“The entire history of tax hikes shows the revenue increases never pan out. The economy is depressed, investment falters, and if that weren’t enough, you’d be emulating Western Europe, which has been taxing itself into recession for many decades,” Kudlow said.
“When you raise corporate taxes, you are hurting middle-class working folks the most. That’s what the data show,” he went on to argue. “They are going to bear about 70 percent of the tax hike burden.”
Kudlow’s other former boss, Ronald Reagan, made the point plainly when he was president: “Business doesn’t pay taxes.”
“Business must pass its costs of operations — and that includes taxes — on to the customer in the price of the product. Only people pay taxes — all the taxes,” Reagan said.
“Government just uses business in a kind of sneaky way to help collect the taxes. They’re hidden in the price; we aren’t aware of how much tax we actually pay.”
Kudlow explained the impact of Biden’s proposed budget on Monday, saying, “Higher taxes plus the massive Biden regulatory state creates fiscal inflation pressures.”
He concluded, “The budget deficit will get worse, not better, under all these tax hikes.”
What Biden proposes is classic big-government, tax-and-spend liberalism.
Reagan had to save the country from it in the 1980s, and Trump in 2016. And it looks like he’ll have to do it again in 2024.
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