The White House intends to cut the federal budget deficit by a total of $3 trillion over the next decade, a reduction that falls short of the $20 trillion in cuts required to balance the budget.
An unnamed senior White House official told the Associated Press on Wednesday that the commander-in-chief’s next budget proposal, which he is scheduled to unveil on Thursday, will decrease the deficit by $3 trillion over the next decade should lawmakers approve the plan. White House Press Secretary Karine Jean-Pierre confirmed the figure later on Wednesday and said that the proposal “shows the American people that we take this seriously.”
Biden had previously vowed during his State of the Union address that the budget proposal would lower the deficit by $2 trillion.
A recent report from the Congressional Budget Office concluded that the federal government is slated to spend $80 trillion in outlays between 2024 and 2033 while procuring $60 trillion in revenues over the same time horizon, implying that the government is slated to accrue $20 trillion in new deficits. The plan from the White House would therefore reduce the deficit by 15%.
“The ongoing deficits are the result of a mismatch between government spending and tax revenue,” Tax Foundation Senior Economist Erica York said in a recent analysis. “While revenue and spending as a share of GDP will meet or exceed their historical averages, spending growth outpaces revenue growth, leading to persistent deficits. Growing costs for interest, health-care programs, and Social Security drive the relative rise in spending.”
President Joe Biden and House Speaker Kevin McCarthy (R-CA) are presently negotiating to decrease spending after the debt ceiling, an arbitrary cap on the national debt established by Congress, exceeded the statutory limit of nearly $31.4 trillion earlier this year. Each official has said they will not consider reforms to Social Security and Medicare, raising questions as to whether meaningful spending cuts will be possible since the two programs constituted 46% of the federal budget during the last fiscal year, according to data from the Treasury Department.
Biden has consistently promised to avoid raising taxes on individuals earning less than $400,000 per year and indicated during his State of the Union address that he would reduce deficits by increasing taxes for high-income households and large businesses. “I will pay for the ideas I’ve talked about tonight by making the wealthy and big corporations begin to pay their fair share,” he remarked. “Big corporations aren’t just taking advantage of the tax code. They’re taking advantage of you.”
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The White House accordingly said on Tuesday that the budget proposal would suggest raising the investment income tax used to fund Medicare from 3.8% to 5% for individuals earning more than $400,000 per year. “Since Medicare was passed, income and wealth inequality in the United States have increased dramatically,” the White House contended. “By asking those with the highest incomes to contribute modestly more, we can keep the Medicare program strong for decades to come.”
Debate over fiscal policy among Republicans and Democrats comes as the national debt surpasses $31.5 trillion and the government faces insolvency in the next several months. Runaway federal spending has occurred under administrations controlled by both major parties.