8 Things to Know About Biden’s Fiscal 2024 Budget, From Bad to Worse

  • Post category:News / US News

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When discussing budgets, President Joe Biden often uses a quote that he attributes to his father: “Don’t tell me what you value. Show me your budget—and I’ll tell you what you value.”

If the administration’s latest budget is any indication, Biden doesn’t value America’s future.

1) More Spending and Debt

A president’s budget is a request to Congress and can be thought of as a wish list rather than an all-or-nothing demand. Administrations typically lay out an ambitious policy agenda that’s unlikely to happen.

Incredibly, even the Biden administration’s wish list doesn’t include bringing the national debt under control—even with enormous tax hikes.

  • Over a decade, the budget envisions a combined $1.85 trillion in additional spending above the status quo. This reaches an unprecedented $10 trillion of spending in 2033 alone.
  • Despite $4.7 trillion in net tax increases, the budget still allows debt to grow faster than the economy, which is ultimately the most important measure of fiscal health.
  • The budget’s annual deficits range between 4.6% and 6.8% of the economy, far above the pre-pandemic historical average of 2.9%. With the national debt already dangerously high, not even trying to bring deficits down to earth is a budgetary dereliction of duty.
  • While Biden enjoys grandstanding about Social Security, the budget shows that he’s willing to sit idly by and watch it go bankrupt in 2033. That would automatically trigger benefit cuts of 23% for retirees.

None of this should come as a surprise. While the administration claims to be fiscally responsible, the reality is that the president’s policies added $6 trillion to near-term expected deficits after just two years in office through a combination of wasteful legislation and problematic executive actions.

Drilling down to the budget’s gory details doesn’t improve things.

2) $4.7 Trillion Tsunami of Tax Hikes

The Biden budget includes several dozen new tax increases that would cost Americans $4.7 trillion over the course of a decade. That’s more than $35,000 per household. Worse, this doesn’t even include allowing the expiration of most of the Trump individual income-tax cuts, meaning tax-rate increases from top-to-bottom and slashing the standard deduction by about $7,000 for single filers and $14,000 for married filers—a provision that mostly helps low- and middle-income taxpayers.

Yet the Biden budget repeats the tired claim that “Under [Biden’s] plan, no one making under $400,000 per year will pay more in new taxes.”

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Apparently, by their logic, allowing old taxes to return doesn’t count as adding new taxes.

But that’s not the only flaw in their logic. Consider just a handful of the new tax hikes being proposed:

  • Nearly doubling the tax rate on capital gains.
  • Increasing the corporate income-tax rate by one-third to make it the second-highest in the developed world.
  • Increasing the net investment income surtax to 5%—on top of federal and state income taxes that would often exceed 50%.
  • Extending the net investment income surtax to most small-businesses income.
  • Even more funding and power granted to the IRS for more expansive audits.
  • Taxes on the development and exploration of oil, natural gas, and mining.

It’s absurd to think that the government can pile taxes on American small businesses, corporations, and investors six ways to Sunday and that workers and consumers in the U.S.—yes, including those who make much less than $400,000 a year—won’t pay a steep price.

Businesses and investors aren’t charities. Businesses exist to provide customers with goods and services, and business owners and entrepreneurs expend their own time and risk their own money with the expectation that they can take home some profit.

If Biden’s deluge of taxes were enacted, many investors would pull out of U.S. markets, and Americans’ retirement accounts would take a pounding. Nor would businesses simply absorb all those taxes. Many businesses would fold if they tried, so most of the cost would cascade down on American workers and consumers in the form of lower wages, fewer jobs, and higher prices.

One thing’s for sure. This looks like a tax plan that would be proposed by an administration that consists mostly of officials with zero years of business experience.

3) Bad Medicine for Medicare

The rapid, decades-long growth in Medicare spending has been driven by the rapid aging of the American population, the continuing retirement of the Baby Boom generation, and the continuous increase in the per capita cost of delivering high-quality care to seniors with multiple and complex medical conditions.

Under current law, Medicare spending, aggravated by inflation, will continue to grow faster than wages and the general economy, and more rapidly than private health insurance spending. While the Medicare trustees have repeatedly called upon Congress and the White House to work together to adopt measures to slow the growth of Medicare spending, the Biden budget drives even higher spending.

According to the White House’s own projections, Medicare spending will steadily increase from 3% percent to 4.5% of gross domestic product in 2033.

This isn’t to say that the president has avoided Medicare cuts. He has framed those cuts, however, as cuts to providers, such as doctors and hospitals. It’s impossible, of course, to cut payments for benefits without directly affecting those who depend on those benefits. Nonetheless, the president is doubling down on Medicare payment reductions for prescription drugs.

The White House budget document states, “The budget builds upon the Inflation Reduction Act to continue lowering the cost of prescription drugs. For Medicare, this includes further strengthening its newly established negotiation power by negotiating more drugs and bringing drugs into negotiation sooner after they launch.”

The use of the word “negotiation” here is an abuse of the English language. In fact, Medicare “negotiates” nothing. The Inflation Reduction Act establishes an elaborate government prescription-drug price control regime. It’s designed to reduce the number of drugs and therapies whose prices are determined through private market negotiation, while increasingly expanding the universe of drugs covered by the government “negotiation” process.

Biden’s proposed Medicare payment cuts for drugs are substantial. According to the president’s budget proposal, his expanded Medicare “price negotiation” will reduce outlays by $4 billion in 2026, rising sharply year by year to $30 billion in 2033.

This budget’s price-fixing program would reduce Medicare payments for prescription drugs, which will further reduce investment in drug research and development. That’s the point: Controlling prices means controlling supply.

According to both the Congressional Budget Office and independent economists, it will reduce the availability of new medical therapies and breakthrough drugs, leading to unforeseen consequences on public health. The Medicare program will spend less, and seniors will “pay” more to secure the program savings—some dearly. 

A second major component of Biden’s Medicare agenda is the addition of a new tax on high-income Americans to extend the solvency of the Medicare Hospital Insurance trust fund.

Under current law, Medicare’s Hospital Insurance  trust fund is projected to be insolvent in 2028, meaning that it will not be able to finance all the promised Medicare hospital benefits. Medicare payments for hospital benefits would be automatically cut by 10% initially, with increasingly deeper cuts thereafter.

Biden’s budget proposal would dramatically raise taxes on high-income individuals and small businesses, and would redirect revenues from taxes on investments and small businesses into the Hospital Insurance trust fund. The White House claims that this would extend the life of the trust fund by 25 years.   

Even if that’s true, what the Biden administration fails to mention is that the Hospital Insurance trust fund problem is only a part of Medicare’s much larger financial challenge. As the Medicare trustees report describes, the big cost explosion is in Medicare’s Supplementary Medical Insurance program, which consumed 17% of all federal income taxes in 2017 but is projected to consume close to 27% in 2040.

Without reforms, this dramatic increase in spending on the Supplementary Medical Insurance program would almost certainly cause future generations to face much higher taxes, killing jobs and stagnating the economy. Millennials and their kids won’t know what hit them.

Biden’s Medicare proposal represents more of the same “solutions” that have already been tried and found wanting: a combination of big tax increases and big payment cuts.

It falls far short of the comprehensive Medicare reform that’s needed, based on personal choice and market competition. Such a modernized Medicare program could enhance benefits and coverage options at competitive prices, securing better care at lower costs for all patients.  

4) Failure to Address Needs of Military 

The proposed defense budget shows just how uncommitted the administration is to national defense, but this should be no surprise.

Since taking office, military readiness and recruitment have reached record lows, while our adversaries strengthen. China just announced a 7.2% defense budget increase, and Biden’s response is to propose a U.S. defense budget that will result in a net loss of buying power. 

While other federal departments received proposed budget increases of more than 10%, the Pentagon would encounter a loss of purchasing power of about $9 billion. Biden is sending the wrong message to our adversaries and all but inviting the Chinese Communist Party and Russian President Vladimir Putin’s regime to challenge our military in future conflicts. 

Every dollar the taxpayers give the Pentagon must be subject to robust scrutiny and congressional oversight to find savings and efficiencies, but that does not negate the need to adequately fund our nation’s defense.

It is past time to correct the dismal state of our military. Congress must show the world and our president that our military will not compromise strength and resilience for wokeness

5) Failing to Secure Border

Once again, the Biden administration seeks to fund its open-border policies in its latest budget proposal and funding priorities.

While the White House and Department of Homeland Security claim that the budget funds things like helping to “secure the border” and supporting a “fair, orderly, and humane immigration system,” it does nothing of the sort.

Instead, this budget incentivizes more illegal immigration by proposing a massive new $4.7 billion contingency fund for DHS and its components to respond to migration surges along the border, making even more aliens vulnerable to cartel violence and human and drug trafficking.

The budget also requests more than $7 billion to support refugees and unaccompanied children in the U.S., with an additional $7 billion emergency fund for the same groups. This occurs while the Biden administration’s very policies inhumanely encourage an increase in refugee and unaccompanied children   crossings and the trafficking.

The budget includes $865 million for U.S. Citizenship and Immigration Services—a fee-based agency—to process the increasing asylum caseload and the total pending backlog when the administration refuses to charge even a nominal fee for asylum applications and encourages more asylum fraud by the masses illegally crossing our southern border.

As for the backlog cases, those applicants already paid a fee for their case to be adjudicated. U.S. taxpayers should not have to pay a second time for USCIS to do its job.   

The administration claims this budget “Enhances Border Security and Immigration Enforcement,” but true immigration enforcement is entirely missing. Immigration enforcement would look like removing aliens with orders of removal and detaining illegal aliens instead of placing 100-day moratoriums on deportations and releasing criminal aliens into the U.S.

Additionally, these budget priorities neglect the DHS mission to secure the homeland and instead focus on priorities entirely outside of the department’s scope. The budget proposes $145 million for the Cybersecurity and Infrastructure Security Agency, which is now in the business of censorship and controlling the flow of information to the American public, and $123 million to support investments in emission-free vehicles.

The DHS portion of the president’s proposed fiscal 2024 budget throws more money at the agency with no solutions to stop or slow the border crisis, increases the pull factors for illegal immigration, and misallocates taxpayer resources to fund climate and censorship initiatives while neglecting to secure our nation. 

6) Spending Spree for ‘Carter’s Boondoggle’

The Biden budget proposes a massive federal education spending spree, likely in an attempt to keep Department of Education funding artificially elevated in the wake the $168 billion in COVID-19 “recovery” spending authorized in 2021.

Over the past decade and a half, the agency has enjoyed significant infusions of cash above and beyond its standard appropriations, beginning with the Obama administration’s “stimulus” spending in 2009.

In its fiscal 2024 budget, the Biden administration requests $90 billion in discretionary spending, a $10.8 billion (13.6%) increase over 2023 enacted levels. Among the more eye-popping figures are:

  • $20.5 billion for Title I, a $2.2 billion increase. Title I is designed to provide funding to lower-income school districts. However, today, nearly every school district gets some Title I money, and all students are eligible for Title I programs if their school is designated a Title I school, even if those students are not poor. The Biden budget would continue a trend of expanding Title I to non-poor students, accelerating mission creep and poor targeting of taxpayer resources.
  • The budget would spend $578 million to increase the number of social workers and psychologists in schools. Non-teaching administrative staff bloat has been an ongoing problem in districts across the country. Non-teaching staff has increased at a rate 7 times that of increases in the number of public school students since 1950.
  • The Individuals with Disabilities Education Act  (IDEA) program would get a significant increase to $16.8 billion, rising $2.1 billion over 2023.
  • The budget would spend $100 million on a new initiative to “promote racial and socioeconomic diversity” in schools.

But most notably, the budget proposal would grow Washington’s intervention in education in two unprecedented ways: through “free” (read taxpayer-funded) preschool and through “free” community college. Neither of these domains are under the purview of the federal government.

It would spend $600 billion over 10 years to finance preschool for all four-year-old children, while also increasing funding for the failed federal Head Start program to $13.1 billion (a $1.1 billion annual increase).

The rigorous research on the effects of government preschool show that it does not deliver on proponents’ promises. It does not improve academic outcomes long-term, has negative social impacts on participants, and introduces large distortions into the preschool market that drive up prices—costs which must be borne by parents and taxpayers. The federal Head Start program has failed for a half century to improve children’s academic outcomes, their access to health care, or their parents’ parenting practices, according to randomized, controlled trial evaluations conducted by the Department of Health and Human Services.

The Biden budget’s $500 million plan for “free” community college is equally flawed, setting the stage for further increases in college costs and tilting the scale in favor of one type of postsecondary experience. Coupled with the administration’s ongoing (and legally unsupportable) efforts to provide student loan debt amnesty to borrowers, the budget plan is the most recent attempt to put taxpayers on the hook for bailing out the nation’s flawed higher education system.

The massive 13.6% proposed increase to the U.S. Department of Education’s budget takes the country in the wrong direction. Congress should reject it, and instead focus on going in the opposite direction; namely, laying the groundwork for ultimately eliminating “Carter’s bureaucratic boondoggle.”

7) Road Map to Stagflation, Socialism

Among the parade of horrors included in Biden’s budget is what it would have in store for the overall economy. In all, Biden calls for more than $615,000 in federal spending per household over the next 10 years.

This level of spending would mean that fully one-quarter of the economy over the next decade would be siphoned off by the federal government and run through its programs. This budget represents yet another leftist attempt to shrink the private sector and place the federal government in charge of our economy.

It’s important to remember that every dollar spent by the government is a dollar taken out of the hands of the hard-working Americans who earned it. When the government spends, it doesn’t produce something. It merely reallocates scarce resources.

In the case of Biden’s budget, it reallocates away from innovative and productive businesses and toward unprofitable special interests that favor the president.

Further, the $17 trillion in new deficits planned by this budget over the next 10 years would crowd out private investment. Since the federal government has no cap on dollars it can print or tax to pay back debts, it can draw capital away from businesses that have to earn their money through hard work.

This crowding out will exacerbate current stagflationary pressures, driving up unemployment and driving down wages and economic growth. Biden seems to bank on the Federal Reserve simply printing some of the $17 trillion required to cover his planned deficit. In that case, we’d simply trade a crowding-out crisis for an inflation crisis—of the very sort we’ve seen for a year and a half as Fed money-printing turned into an inflation tax of more than $7,000 per family.

Biden’s other financing scheme, his tax hikes, contains his true plan for the economy. Don’t be fooled by his hollow rhetoric: Biden’s tax hikes may look like they are only on the wealthy and large companies, but in truth, they are aimed squarely at the American people. They will encourage investment capital to flee our nation or to be trapped in the original investment, making new domestic investment prohibitive.

These taxes would drive us further down the path towards socialism. By making private sector investment in productive pursuits more expensive or impractical, it leaves the government in prime position to take over the economy.

If Biden’s economic plans, outlined in his budget, were to be enacted, the result would drive up both unemployment and inflation, creating stagflation. Manufacturing such a crisis would likely lead to yet more misguided calls for economic intervention—calls the current administration would surely welcome.

8) Leadership Vacuum—and Opportunity

It might be tempting to throw up one’s hands in despair over the sorry state of the federal government, but the future of the greatest nation on earth depends on our willingness to keep fighting for it.

It’s still possible for America to have a future of growth and prosperity like Florida’s, rather than stagnation and decline like New York’s.

This year’s fight over the debt limit provides conservatives with an opportunity to deliver a dose of fiscal sanity to Washington. In that vein, The Heritage Foundation’s Budget Blueprint delivers a comprehensive guide for lawmakers on spending, taxes, and bringing debt down to size.

Elected officials often claim they want to serve the country. They won’t get a better chance than this.

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The post 8 Things to Know About Biden’s Fiscal 2024 Budget, From Bad to Worse appeared first on The Daily Signal.

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