President Biden has released his fiscal year (FY) 2025 budget request.  The budget proposal, which as usual was submitted late on March 11 rather than the due date of February 5, is replete with massive tax hikes and burdensome proposals that will be devastating to taxpayers and the economy.  The $7.3 trillion proposal increases taxes by $5.5 trillion and doubles down on many of the progressive (expensive) ideas that have been promoted by the Biden administration in prior budgets. 

As the House Republican Leadership said in its statement, “The price tag of President Biden’s proposed budget is yet another glaring reminder of this Administration’s insatiable appetite for reckless spending and the Democrats’ disregard for fiscal responsibility.  Biden’s budget doesn’t just miss the mark — it is a roadmap to accelerate America’s decline.”

The President’s budget includes several harmful corporate tax provisions.  His budget suggests raising the corporate tax rate from 21 percent to 28 percent and implementing a global minimum tax of 21 percent for multinational corporations.  The White House claims that this would ensure that “profitable multinational corporations … pay their fair share.”  Raising the corporate rate would make the U.S. less competitive globally and diminish the America’s status as the leading global economy.  Like past estimates of how tax increases supposedly increase revenue, the estimates for deficit reduction based on those new taxes will fall far short of the amount claimed by the White House.

President Biden’s budget also doubles down and expands on harmful healthcare policies that were included in the Inflation Reduction Act (IRA).  The budget would expand the number of prescription drugs that are subject to negotiation and implement a cap on the cost of prescription drugs in the commercial market.  According to an August 2022 University of Chicago study by Tomas J. Phillipson and Giuseppe Di Cera, price controls like those in the IRA would increase healthcare spending by $50.8 billion over the next 20 years and result in 135 fewer new drugs, negatively impacting the lives of 2.47 million patients.  The IRA has already led to less drug research and innovation, and the development of some drugs has been slower than in the past.  Expanding these policies would be even more detrimental to pharmaceutical research and development and patients. 

Higher taxes and disastrous healthcare policies are not the only parts of the IRA that are being resurrected in the President’s budget.  Pitting taxpayer against taxpayer, the budget seeks to restore funding to the IRS with the goal of “finally cracking down on high-income individuals and corporations who too often avoided paying their lawfully owed taxes, and to improve service for the millions of Americans that do pay their taxes.”  While improving customer service at the IRS is important, increased funding for the IRS would likely be used to implement harmful policies like the agency’s new reporting threshold for the 1099-K tax form and the Direct File program.  Congress was right to strip funding from the IRS and members of Congress should reject any efforts to increase funding for the agency.

The budget includes other tax proposals that repeatedly have been rejected by strong bipartisan opposition, including the elimination of the step-up basis for certain assets that pass through an estate.

The President’s budget proposal will be disastrous for budget deficits and the national debt.  The budget projects that the federal deficit will continue to grow, and the national debt will reach $52 trillion by 2034.  Federal debt and deficits are reaching all-time highs and because interest rates remain high the debt is becoming even more expensive to service. 

According to the Congressional Budget Office’s “The Budget and Economic Outlook: 2024-2034,” interest on the debt will exceed defense spending beginning in FY 2025, and cost $2.7 trillion more than total defense spending between FY 2025 and FY 2034.  Interest payments will be exceeded only by Social Security and Medicare.  Simply put, the President’s budget would throw gasoline on the fire when the country simply cannot afford more reckless government spending. 

President Biden’s FY 2025 budget request is a continuation of the policies that have become a hallmark of his first term in office.  More government spending, expanding drug price negotiations, higher taxes, and increased funding for the IRS would hurt taxpayers and the economy.  Congress should summarily dismiss this budget request and enact a budget that reduces wasteful government spending and enact policies that protect taxpayers and encourages economic growth, like the fiscally responsible FY 2025 budget passed by the House Budget Committee on March 7, 2024, which balances the budget and cuts the deficit by $14 trillion over 10 years.