President Joe Biden on March 11 will release his fiscal year 2025 budget, which is expected to feature major tax increases for the wealthy and businesses, reductions in defense expenditures, and initiatives to make housing more affordable.
The president’s budget plan, which outlines his financial priorities, will hold special symbolic significance this year as he seeks re-election.
Meanwhile, lawmakers are still struggling to fund the government for fiscal year 2024. They need to pass a second funding package of six bills, including one for defense, by the March 22 deadline.
This year, President Biden’s budget plan will be released 35 days late. Under the Congressional Budget Act of 1974, the president was supposed to submit his budget request to Congress on Feb. 5.
Here are a few highlights expected from the budget proposal for the fiscal year starting in October:
Tax Proposals
President Biden released a fact sheet ahead of his State of the Union address on March 7, previewing his tax proposals in his budget blueprint.
He proposes to raise the corporate income tax rate to 28 percent from 21 percent.
He also proposes increasing the corporate minimum tax rate to 21 percent. The minimum tax enacted as part of the Inflation Reduction Act in 2023 requires corporations with more than $1 billion in revenue to pay federal tax of at least 15 percent of their profits.
President Biden’s plan also quadruples the stock buyback tax in response to the surge in share buybacks by companies in recent years.
He proposes imposing a minimum tax on the wealthy, requiring them to pay at least 25 percent of their total income, including unrealized capital gains, each year.
“Do you really think the wealthy and big corporations need another $2 trillion in tax breaks?” President Biden asked during his State of the Union address on March 7. “I sure don’t. I’m going to keep fighting like hell to make it fair.”
He also said he wouldn’t increase taxes for those earning less than $400,000.
Defense Budget Sees 1 Percent Rise
President Biden is expected to propose a total of $895 billion for defense and national security. This is in line with a debt deal reached last year between the White House and then-House Speaker Kevin McCarthy, which capped the 2025 defense budget at 1 percent above the $886 billion 2024 budget.
According to a Bloomberg article citing anonymous sources, the White House intends to request less funding for procurement and research and development than previously projected in order to meet the budget cap requirement. The Pentagon is slashing orders for F-35 fighter jets and the much-delayed Virginia-class submarines, the article stated.
A Reuters article earlier also stated that the president plans to ask for an 18 percent cut in the number of F-35 jets the Pentagon purchases in 2025 to find savings.
Last year’s debt ceiling agreement capped defense spending for 2024 at $886 billion. However, this amount could soar to $953 billion if Congress approves the latest foreign aid package for Ukraine, Israel, and Taiwan.
In February, the Senate passed a $95 billion foreign aid bill that would allocate an extra $67 billion to the Pentagon. However, House Speaker Mike Johnson (R-La.), has refused to bring the measure up for a vote. Republicans are currently divided on the issue of continuing U.S. aid to Ukraine.
Before this new request, $113 billion had been authorized for Ukraine since February 2022. Of this total, $67 billion was designated for defense, including direct military aid via the Presidential Drawdown Authority, the Ukraine Security Assistance Initiative (USAI), and Foreign Military Financing.
Non-defense spending for Ukraine accounted for around $46 billion, including nearly $27 billion in economic support for the Ukrainian government and businesses.
Some believe the U.S. defense budget is too low to meet the existing global challenges.
“The future of America’s national security faces two huge challenges: an outdated defense strategy and a budget that is too low to support it,” Elaine McCusker, a senior fellow at the American Enterprise Institute, wrote in a report in February.
“With China already vastly outpacing the United States in fleet size and production capacity, ramping up our own capabilities is a time-sensitive priority,” she added.
China has the world’s second-largest defense budget behind the United States. Last week, the Chinese Communist regime announced that it would boost military spending by 7.2 percent to 1.67 trillion yuan ($231 billion), similar to last year’s rise.
Proposals to Lower Housing Costs
President Biden seeks to address the growing deficit of affordable homes in the country. The White House released a fact sheet on March 7, previewing the administration’s budget proposal to cut housing costs for millions of Americans, in line with previous years.
President Biden urges Congress to pass a mortgage relief credit that would provide a $10,000 tax credit for first-time homebuyers. This will lower the median home’s mortgage rate by nearly 1.5 percentage points, according to the White House.
“I know the cost of housing is so important to you. If inflation keeps coming down, mortgage rates will come down as well. But I’m not waiting,” President Biden said during his State of the Union address.
“I want to provide an annual tax credit that will give Americans $400 a month for the next two years as mortgage rates come down to put toward their mortgage when they buy a first home or trade up for a little more space,” he said.
The President will also ask Congress to give first-time homebuyers up to $25,000 in down payment assistance.
In its budget proposal, the president will propose expansions to the low-income housing tax credit to build or preserve 1.2 million additional affordable rental units. He will also unveil a new $20 billion competitive grant fund as part of his budget to support the construction of affordable houses.
As with last year, the president’s budget is also expected to include cost-cutting measures for families, investments in American manufacturing, and protections for Medicare and Social Security.
The budget plan is generally viewed as a political messaging document and is unlikely to become law.
From The Epoch Times
