Biden's $6.8 trillion budget proposes tax hikes on wealthy to reduce deficit, shore up Medicare

President Biden outlined a slew of tax hikes on wealthy Americans as an avenue for reducing the deficit and funding key programs like Medicare in his proposed budget for fiscal year 2024 released on Thursday.

It gives a glimpse of the policy proposals and issues Biden hopes to emphasize ahead of a reelection bid. The budget, with a topline total of $6.8 trillion, will not be enacted into law, but it will serve as another starting point for debates on spending as the White House and Congress head toward a debt ceiling fight later this year.

Biden's budget priorities aim to reinforce his position as a president who wants to reduce the deficit, require wealthy corporations to pay a bigger share in taxes, lift up working class Americans and fund programs with widespread support — like Social Security and Medicare — that are under attack from Republicans.

The White House said the budget would reduce the federal deficit by roughly $3 trillion over a 10-year period through significant tax increases on corporations and billionaires in particular.

The White House called the budget a "blueprint" to build on progress from the first two years of the administration. It claims that Republicans "have taken a very different approach" and want to add to the nation's debt.

Shalanda Young, the director of the Office of Management and Budget, said releasing the budget is "a start of a healthy dialogue" and that the White House is ready to have a debate with Republicans who will likely argue that the president's budget will hurt growth.

"When you look at this president's view of the world and what this budget puts forward, it shows you what he values," Young said. "And that's what this is going to be about. And we're happy to have that debate with anybody."

The White House's wish list of policies includes: restoring the full Child Tax Credit, which was first enacted in the American Rescue Plan; a billionaire minimum tax, which would impose a tax of at least 25 percent on total income for Americans whose wealth exceeds $100 million; making increases to the corporate tax rate; making permanent some tax credits related to the Affordable Care Act; and providing national paid leave.

Some of those proposals are extensions of the Inflation Reduction Act, a piece of legislation passed with only Democratic votes last year that some in the GOP have said they will try to repeal.

Biden also wants to expand entitlement programs by extending the lifetime of Medicare. And, while the budget doesn't also include a solvency plan for Social Security, the White House argues it makes clear that cuts to the program are non-starters.

"The number one threat to Social Security and benefits for folks like my 94-year-old grandmother is those on the other side of the aisle who say they want to cut benefits. That's why this budget takes the position that that is not on the table," Young said.

The budget includes funding to compete with China and continued aid for Ukraine amid the Russian invasion, as well as to respond to the intense criticism the administration has received over the situation at the southern border. It includes almost $25 billion for U.S. Customs and Border Protection and Immigration and Customs Enforcement — an increase from the $15.3 billion proposed for the agency in the president's fiscal 2023 budget — while Biden faces backlash over the influx of migrants at the border throughout his administration.

Biden is set to detail the key parts of his proposed budget in remarks to supporters Thursday afternoon at a union hall in Philadelphia. The decision to travel to a swing state and address unionized workers shows how the White House is using the document to hit on key themes that will resonate through Biden's likely reelection bid in 2024.

The White House has long argued that Biden's budget will be a transparent demonstration of his priorities. At the same time, White House officials have called on Republican lawmakers in the House to release their own budget proposal, believing that by doing so the GOP would expose its desire to cut spending for popular government programs.

The budget proposal also serves as something of a launching pad for more serious negotiations over the debt ceiling, an issue that will loom over Washington for the next several months.

Congress must raise the debt ceiling, likely by June, in order to avoid a default that would have catastrophic effects on the economy. Biden has said he will not negotiate with Republicans over cuts to government programs as part of a debt ceiling deal, but his proposal to increase taxes in order to make Medicare solvent for an additional 25 years has already landed with a thud on Capitol Hill.

Speaker Kevin McCarthy (R-Calif.) on Thursday called Biden's proposal "completely unserious," citing the trillions of dollars in proposed new taxes.

"Mr. President: Washington has a spending problem, NOT a revenue problem," McCarthy tweeted.

The budget will also play into the broader debate about the state of the economy.

The White House has for months argued that inflation is cooling and the risk of a recession is dwindling, while pointing to strong employment numbers and gains in manufacturing in particular to make the case that Biden inherited a weak economy and enabled a strong recovery during his first two years in office.

And while Biden has pledged not to raise taxes on Americans making less than $400,000, Republicans are likely to jump on the trillions of dollars of tax increases overall, as well as key spending proposals, to warn that Biden's plan will drive the economy into the ground.

"Taxes, taxes, and more taxes," Sen. John Cornyn (R-Texas) tweeted Thursday morning, reacting to news of Biden's plans.

Updated 12:51 p.m.