Biden’s budget would rack up record-shattering deficits, the highest the U.S. has seen since World War II. The debt is so enormous that even the huge tax increases Biden is proposing would not begin to make a dent in it until the 2030s, by the White House’s own admission.
“We know from history,” the president said last week in Cleveland, “that these kinds of investments raise both the floor and the ceiling of an economy for everybody.”We also know from history that excessive deficit spending risks ruinous inflation that decimates the savings of retirees, pushes working people into higher tax brackets, and sharply raises the cost of living for everyone. Inflation is effectively a tax increase on all Americans.
So it should concern everyone that the president has proposed massive spending increases on virtually everything. His infrastructure plan includes much that has bipartisan support, such as spending on roads, bridges, broadband, ports, airports, transit, water infrastructure and manufacturing research. But the president also seeks funding for new entitlement programs that will obligate taxpayers to cover permanent, and possibly unlimited, annual costs.
Biden has proposed universal kindergarten, two years of free community college, funding for childcare, paid family and medical leave, expanded tax credits for health insurance and another increase in the refundable child tax credit. His proposal asks Congress to expand health coverage, reduce deductibles and lower the Medicare eligibility age to 60. The bureaucracy gets its share, too. The president is asking for increases in the budgets of many agencies, including an additional $14 billion spread around to government offices fighting climate change.
The White House acknowledges that the spending is on the nation’s credit card but insists that after ten years or so, the president’s proposed tax increases will begin to trim the deficits.Biden seeks to raise the corporate tax rate from the current 21% to 28% and the top capital gains rate from 23.8% to 43.4% for households with income above $1 million. His plan also calls for taxing the capital gains on inherited assets at death, allowing only a $1 million exclusion. And he wants to hire tens of thousands of new IRS agents to enforce tax collections more aggressively.
In what amounts to an admission of the risk of these tax increases, the Biden administration is seeking to persuade other countries to adopt a “global minimum tax” on corporations in order to prevent U.S. companies from fleeing. Even one overseas tax haven could mean Americans will be left with fewer jobs, high inflation and a growing national debt as the cost of new entitlement programs continues to increase.Although Biden has vowed not to raise taxes on anyone earning less than $400,000 annually, he has not promised to support the renewal of the lower tax rates put in place by the 2017 Tax Cuts and Jobs Act. Congress set those rates to expire in 2025.
Biden’s oversized budget is setting the stage for a massive middle-class tax increase. All budget proposals are political documents, but this is a particularly cynical one.