Biden’s Budget Underscores Divide With Republicans and Trump

In theory, funding the government takes place in two major stages. First, lawmakers on the Budget Committees coalesce around a budget resolution — a blueprint laying out an overall spending ceiling and a revenue floor. Then, after Congress approves a budget resolution, it falls to lawmakers on the Appropriations Committees to allocate federal dollars, following the blueprint.

Here is a step-by-step overview of the process, and why it will be so fraught.

Step 1: The president submits his budget to Congress.

In addition to setting an aspirational top-line number, federal agencies prepare detailed documents outlining requests in support of their programs, projects and activities.

Step 2: Lawmakers draft and pass their own budget.

Theoretically, the budget committees in the Senate and House separately draft budget resolutions, setting their own top-line numbers and providing general contours for federal spending. However, in the past several years, lawmakers have skipped this step altogether, and congressional leaders, in collaboration with senior appropriators, have agreed on the overall numbers.

Last week, House Republicans pushed their plan through the Budget Committee, putting forth a blueprint that would slash $11 trillion in domestic spending, and which they said would result in $8.7 trillion in reductions in mandatory spending on programs including Medicare and Medicaid.

It is not clear whether they will be able to win adoption of their budget by the full House, where they have a tiny majority, but if they managed to do so, it would be certain to be rejected out of hand in the Democratic-controlled Senate.

Senate Democratic leaders have not put out their own budget.

Step 3: Appropriators allocate money to federal programs.

Once Congress has either approved a budget resolution or congressional leaders have agreed upon a top-line number, lawmakers on the Appropriations Committees will set spending levels for federal agencies on a more granular level, and codify them into appropriations bills to fund all aspects of the government.

In recent years, these spending bills have been lumped into one enormous piece of legislation referred to as an “omnibus.” This year, right-wing Republicans have pushed hard to avoid an omnibus. Instead, Congress last week cleared a spending package for the current fiscal year that wrapped together six of the 12 federal funding bills into a “minibus,” sending it to Mr. Biden for his signature before a midnight deadline on Friday.

The spending levels adhered to a two-year fiscal deal that Mr. Biden struck last spring with former Representative Kevin McCarthy, then the Republican speaker. Conservative hard-liners have urged Speaker Mike Johnson to abandon that deal and secure steeper cuts, but he has so far been unable to stray from the agreement since G.O.P. opposition to federal spending bills means that he needs Democrats to push them through.

Step 4: Presidential signature or government shutdown.

The president must sign spending bills by Oct. 1, the start of the fiscal year, to fund the government. If Congress fails to agree on them, lawmakers must either extend the current year’s spending levels while they work out their differences, or funding lapses altogether, leading to a shutdown.

Congress is not yet finished with that process for the current fiscal year. Over the next two weeks, lawmakers must negotiate and pass the remaining six spending bills to keep the government funded through Sept. 30.

The proposal on Monday includes $2.9 billion for the Department of Homeland Security to hire more than 2,000 border officials and more than 1,600 asylum officers. The proposal would also bolster investigations into cartel organizations and drug traffickers, while investing in technology at border ports.

Mr. Biden also proposed creating a $4.7 billion emergency fund that the Department of Homeland Security could tap into when there are spikes in illegal crossings.

Mr. Biden has been leaning into an enforcement-minded approach to the southern border as immigration has become one of the dominant issues in the 2024 election. He has endorsed a bipartisan senate bill that would implement sweeping restrictions at the border and make it harder for migrants to claim asylum.

The proposal to surge the hiring of border patrol agents will likely provide his White House another data point as they argue that the administration is focused on addressing the border crisis while Republicans have blocked legislative solutions. But Republicans are not likely to agree to this budget proposal either after claiming Mr. Biden’s $13.6 billion supplemental package did not go far enough to curb illegal crossings.

“The President’s budget continues to invest in the security of our borders, even as we continue to call on Congress to pass the February bipartisan border security legislation to provide urgently needed resources and tools to our frontline personnel,” Homeland Security secretary Alejandro Mayorkas said in a statement.

Mr. Biden’s budget also includes funding for the delayed and broken immigration court system. The backlog of the immigration courts surpassed 3 million cases late last year, meaning many migrants who cross the border will wait years before they receive a decision on their case. The budget includes $981 million for the court system, an increase of $121 million, which would hire 25 teams to support immigration judges. It also calls for a $1.3 billion investment from Mr. Biden’s emergency supplemental request to hire 375 new immigration judges.

While Republicans did not specify how those savings would be achieved, Democrats charged that doing so would mean slashing payments to Medicare providers and imposing work requirements on Medicaid.

The Republican budget also includes a recommendation to repeal the clean energy and climate provisions of the Inflation Reduction Act, cutting an estimated $250 billion in spending.

“We are determined to show America what the path to balance looks like, and will continue to work to reverse the curse of our nation’s debt crisis and fix our broken budget process,” Representative Jodey Arrington, Republican of Texas and the chairman of the Budget Committee, said.

House Republicans also said they would achieve $1 trillion in savings through halving “improper payments,” and projected that the government would reap an additional $3 trillion through faster economic growth than nonpartisan congressional budget scorekeepers have anticipated as a result of tax cuts and “eliminating the regulatory state.”

Democrats called the budget blueprint a “near-apocalyptic vision for government programs,” charging Republicans with approving cuts to Medicare providers totaling nearly half a trillion dollars over 10 years.

“This MAGA budget is an assault on everything from health care to education,” Representative Brendan Boyle of Pennsylvania, the top Democrat on the Budget Committee said. “It would strip funding for food assistance for those in need, attack Medicaid and make indiscriminate cuts to many government programs upon which Americans rely.”

“Does anybody here think the tax code’s fair?” Mr. Biden said during remarks in New Hampshire on Monday. “I don't either.”

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Biden Plan Would Raise Taxes on Corporations and the Wealthy

The proposals in President Biden’s budget plan, including the tax increases, project to reduce deficits by about $3 trillion over a decade.

It’s my goal to cut the federal debt even more by making big corporations and the very wealthy begin to pay their fair share. I’m not anticorporation. I represented the state of Delaware. More corporations incorporated in Delaware than every other state in America combined. Combined. But guess what? But I’m a capitalist, man. Make all the money you want. Just begin to pay your fair share, your taxes. I had a tax code that charged them [billionaires] 25 percent. Not the highest rate — 25 percent. You know how much that would raise over the next 10 years? $400 billion. [$400] billion a year. Imagine what we could do, from cutting the deficit to providing for child care, to providing health care, to continue to provide our military with all they need. So, folks, look, this is not beyond our capacity.

Overall, Mr. Biden is proposing $5 trillion in additional taxes on corporations and high earners over the next decade. Here’s what those increases would entail:

Corporate tax increases

The budget employs a mix of approaches to make American corporations pay more in federal taxes. That includes raising the corporate tax rate to 28 percent from 21 percent, which is the level that was set by the 2017 Tax Cuts and Jobs Act.

Mr. Biden also calls for increasing what’s known as the corporate minimum tax to 21 percent from 15 percent. That tax, which was passed by Democrats in 2022, applies to corporations that report annual income of more than $1 billion to shareholders on their financial statements but use deductions, credits and other preferential tax treatments to reduce their effective tax rates well below the statutory 21 percent. White House economists estimate increasing the tax could yield $137 billion in new tax revenue over a decade.

The president would also quadruple a 1 percent surcharge on corporate stock buybacks. That tax passed along party lines in 2022.

Corporate and private jet use also would face higher costs under the budget, which proposes raising fuel taxes “so that corporate executives and other wealthy Americans pay their fair share for the use of airspace and other public services related to air travel.” The budget also seeks to eliminate a tax break for corporate jet purchases.

And executive pay is also targeted in the budget. The White House proposes denying corporate deductions for all compensation associated with employees who earn more than $1 million. That goes beyond current tax laws, which only denies such deductions for top executives.

The budget also assumes that a global tax agreement the United States helped broker in 2021 will be enacted, despite the fact that Republicans have refused to entertain the new levy. Under that agreement, more than 130 countries pledged to enact minimum corporate tax rates of 15 percent that firms must pay on their foreign earnings. Mr. Biden wants the U.S. rate to be increased from 10.5 percent, which is not compliant with the agreement, to 21 percent.

Higher taxes for the wealthiest

Since the 2020 presidential campaign, Mr. Biden has pledged that none of his policies would increase taxes on households that earn less than $400,000. The latest budget keeps its laser focus on the wealthiest 1 percent.

Mr. Biden wants to raise the tax rate on capital gains such as stock sales for individuals who earn more than $400,000 to 39.6 percent. He also reiterated calls to close the so-called carried interest loophole that allows wealthy hedge fund managers and private equity executives to pay lower tax rates than entry-level employees.

The budget also includes another attempt at a version of a wealth tax, a complex concept that has long been an ambition of progressives.

The proposal would impose a 25 percent “billionaire tax” on individuals with wealth, defined as the total value of their assets, of more than $100 million. The goal is to prevent the wealthiest Americans from employing tax strategies that allow them to pay lower tax rates than those of middle-class households.

One of the challenges of so-called wealth taxes is figuring out how to determine the value of certain kinds of assets such as art, yachts and other holdings. A Treasury Department document outlining the mechanics of the tax proposals, said that a lot would be left to the discretion of the Treasury Secretary, who would have the authority to approve methods for assessing the value of “non-tradeable” assets. Treasury said that taxpayers would have the opportunity to appeal valuations and have their assets appraised.

Emboldening the Internal Revenue Service

One of Mr. Biden’s biggest priorities during his first term has been revamping the Internal Revenue Service, which received an $80 billion funding boost through the Inflation Reduction Act.

Republicans have been eagerly chipping away at those funds and have already succeeded in clawing back $20 billion of that money.

The White House budget restores those clawbacks and extends the tax collection agency’s modernization money with an additional $104 billion through 2034.

The Biden administration has argued that investments in the I.R.S. enable the federal government to collect more tax revenue without raising tax rates by compelling companies and wealthy tax evaders to pay what they owe. The Treasury Department has estimated that the so-called “tax gap” of revenue that goes uncollected was nearly $700 billion in 2021.

The White House estimated that the additional I.R.S. investments would create $237 billion in net savings over a decade.

Using taxes to shore up retirement programs

Mr. Biden is also calling for new efforts to improve the solvency of Social Security and Medicare, including making wealthy Americans pay more into the programs.

In the budget, he opposes benefit cuts for the programs and any additional contributions from workers earning less than $400,000 a year. On Monday, Shalanda Young, the White House budget director, implied that Mr. Biden would look to shore up Social Security in part by targeting a cap on income subject to the payroll taxes that feed the program. She said Mr. Biden would improve its solvency “by asking high-income Americans to pay their fair share. If you make a million dollars in this country, you are done paying your Social Security taxes sometime in February.”

The budget also calls for increasing the Medicare and net investment income tax rates by 1.2 percentage points for taxpayers with more than $400,000 of earnings.

Most likely dead on arrival

Many of Mr. Biden’s proposals have appeared in similar forms in his previous budgets, and administration officials acknowledged that even when Democrats controlled the House and the Senate it was not possible to pass a wealth tax.

The budget fell flat with Republicans in Congress on Monday. Senator Charles E. Grassley of Iowa, the top Republican on the Senate Budget Committee, described it as “chock-full of corner cutting to circumvent congressional spending caps” and warned that it “presents shortsighted plans to burn through Americans’ pocketbooks.”

The Trump campaign predicted, without offering an analysis, that Mr. Biden’s proposed tax increases would lead to the “immediate” loss of approximately one million jobs.

Jim Tankersley contributed reporting

The president’s proposal also calls for expanding several of Medicare’s new drug regulations into the commercial market. It would limit co-payments on insulin to $35 a month for everyone, not just people covered by Medicare. And it would expand new limits on how fast drug companies can raise their prices.

The budget would extend subsidies that have helped make insurance premiums less expensive for people shopping in Obamacare markets. With the new subsidies, which were passed first as part of a Covid stimulus bill and then temporarily extended by the Inflation Reduction Act, enrollment in Obamacare plans has risen to record numbers three years in a row. But, without legislation, that extra financial help would expire at the end of next year.

The document also makes proposals to expand Medicaid coverage, by offering insurance to poor adults in states that have opted not to cover them and by reducing paperwork requirements that can cause eligible children to lose coverage.

The president’s proposal also calls for stabilizing the Medicare hospital trust fund by raising payroll taxes on those earning above $400,000 per year. It would also designate that savings on drug negotiations be counted toward the trust fund.

The budget would double funding for the Office of Women’s Health at the National Institutes on Health, a priority of the first lady. It would also expand funding for grants to states to fight opioid addiction, and increase funding for public health preparedness for infectious disease. It would increase funding for family planning care by more than a third.

The budget calls for creating a tax credit of up to $10,000 for middle-class first-time buyers. It would also provide $10 billion to create a new assistance program for “first generation” buyers. Administration officials have previously urged Congress to provide up to $25,000 in down payment assistance for buyers whose families have not built generation wealth from owning a home.

The administration also proposed expanding assistance for renters. The budget would provide $32.8 billion in discretionary funding for a program that provides housing vouchers to low-income renters, a $2.5 billion increase over the 2023 level. It would invest $9 billion to establish a housing voucher program for youth aging out of foster care.

The new proposals also intend to lower costs by increasing the supply of new housing. The budget would provide $20 billion to finance the construction of rental apartment buildings and create a new tax credit that would encourage the construction of starter homes. It would also expand an existing tax credit for the construction and rehabilitation of affordable rental housing.

“For too many hardworking families, it costs too much to find a good home, so we are working to lower costs and boost supply of housing nationwide,” Mr. Biden said in the budget proposal.

The budget would also provide $4.1 billion in funding for Homeless Assistance Grants, which would expand aid to about 25,000 additional households, according to the White House.

During his State of the Union address last week, Mr. Biden highlighted his proposals to reduce the cost of housing, and said he is cracking down on “big landlords” that are responsible for egregious rent increases.

Mr. Biden also said his administration was already taking steps to lower costs. The Federal Housing Finance Agency is expected to begin waiving requirements for title insurance for certain borrowers who are refinancing, and the Consumer Financial Protection Bureau is planning to pursue new rules to address “anticompetitive” closing costs that lenders impose on buyers and sellers.

The housing market has had to contend with a sharp increase in interest rates, which have made new mortgages more expensive and have discouraged homeowners with cheap mortgages from selling.