This week, President Biden released his fiscal year 2025 budget proposal.

Not surprisingly, his top priority is excessive, inflationary spending coupled with growth-killing taxes that will hit hardworking Americans in the wallets.

The $7.3 trillion budget is massive and proposes only $5.5 trillion in revenue, leaving a historically high $1.7 trillion deficit. 

The Toplines:

Biden proposes, over a ten-year window:

  • Adding an average of $1.5 trillion to the debt
  • Spending $86.6 trillion with an additional $1.7 trillion of spending increases next year—on top of the $6 trillion in Biden’s first term
  • $5 trillion in tax hikes, mostly on large and small American businesses
  • $12.2 trillion in interest costs

Spending Big on Radical Proposals

Most of the proposed expenditures in the FY2025 budget are resurrected scraps from President Biden’s failed Build Back Better (or Build Back Broke) proposal that was eventually chopped down to some climate-change spending in the non-inflation-reducing Inflation Reduction Act.

  • A new national paid family and medical leave program of 12 weeks 
  • A new national guaranteed childcare program
  • A new universal pre-K and Head Start program
  • New housing subsidies: Two new tax credits–for homeowners, a $10,000 one-year tax credit for selling their home below market rates, and a $10,000 refundable credit for middle-class homebuyers; a $10 billion down payment assistance program
  • 2 years of universal free community college
  • More money for unaccountable green projects
  • Making Obamacare subsidies permanent
  • Expanding the Medicare
  • Expanding the free meal program to highly-paid households such as the children of doctors, lawyers, and lobbyists

President Biden’s proposals on new entitlement programs will not just be expensive and unpaid but will distort or squeeze out current market options. 

As we’ve written about, many of these programs, such as paid leave, child care, and universal Pre-K, will leave many families worse off by displacing their preferred options and current flexible benefits or expanding the woeful results of Head Start to more little ones, as well as opening the door to our toddlers being indoctrinated with progressive ideology. 

Also, President Biden plans to bump the Child Tax Credit back up to the 2021 level and make it fully refundable (meaning that even if one owes no taxes, they will receive the tax credit). While the CTC is a conservative idea that was expanded during the 2017 tax cuts, his proposed changes would reduce work incentives and turn it into more of a universal basic income proposal than help for working families.

In addition, many of the federal agencies growing our economy in opportunity-stifling regulations get a raise such as the National Labor Relations Board (NLRB) which has proposed new restrictions on franchises and small businesses. The Department of Labor (DOL) would get millions more to hire more attorneys to go after employers under new restrictions on independent contracting. These agencies also want to hike fines to penalize employers and businesses.

No way to pay for it all

President Biden plans to pay for some—not all—of these programs with over $4 trillion in new tax increases on businesses and households as the National Taxpayer Union breaks:

  • Raising the corporate income tax rate to 28%
  • A 21% global minimum tax rate on American businesses that will bring us up to global tax rates while reducing our global competitiveness. 
  • A 25% wealth tax on unrealized gains for individuals with income and assets exceeding $100 million, an idea overwhelmingly opposed by Americans.
  • Hiking the tax on stock buybacks will hit every American who owns a 401K, IRA, or union pension, as Americans for Tax Reform explains.
  • $37 billion in new taxes on American energy
  • 32% increase in Medicare taxes
  • Restoring the IRS’ full $80 billion to go after taxpayers, some of which has been cut by House spending deals

While he’s framing these tax increases as making the corporations and wealthy “pay their fair share,” workers will suffer. As much as 30-35% of corporate tax increases are borne by workers in the form of lower pay and fewer jobs. The workers that tend to be most affected are women, young people, and low-skilled workers.

Raising taxes while the job-strangling regulatory agenda continues to take effect will leave workers with skinnier paychecks and fewer jobs. Unemployment is rising and it is taking workers longer to find new jobs as compared to the start of 2021.

Bottom Line

The president’s annual budget is largely symbolic. With a divided Congress and slim margins in each house, President Biden is unlikely to get any of these budget proposals passed, particularly because they are divisive, costly, and unpaid for. We can view this budget as his 2024 pitch to voters rather than a governing agenda.

Nonetheless, the president is sending one signal with this proposal: he is 100% committed to fiscally irresponsible spending that will drive prices up at a time when prices have not returned to the levels they were when he took office or before the pandemic. Meanwhile, he’ll hike taxes on businesses even though that will hurt women, young people, and those with few opportunities.

Reckless, excessive federal spending under Biden’s direction has driven inflation to 40-year highs. He has not learned that repeating the same mistakes will not lead to a better outcome, but worse results for Americans.