Joe Biden will release a multitrillion-dollar budget plan on Thursday, sharpening the contrast with Republicans on taxes, social programmes and defence ahead of looming fiscal battles and the likely launch of his re-election campaign.
The annual proposal comes as the US president and White House officials increasingly see a clash of economic ideologies as a defining feature of the American political landscape over the coming months and heading into the 2024 race.
Biden will present his budget in Philadelphia, the largest city in the swing state of Pennsylvania, rather than in Washington, DC — an unusual shift in venue that points to the political importance of the plan.
“It’s a statement of the president’s values,” Karine Jean-Pierre, the White House press secretary, told reporters on Wednesday.
Looming on the horizon is a stand-off with Republicans in Congress over raising the federal borrowing limit to avoid a potentially devastating default on government debt, which will be the subject of tense negotiations over the summer.
At the same time, Biden will be trying to fend off a new onslaught of criticism from emerging Republican rivals for the White House in 2024, with polls still showing that Americans disapprove of his handling of the economy as inflation proves harder than expected to root out.
“This is as much a political document as a policy one,” Beacon Policy Advisors wrote in a note to clients ahead of the budget announcement. “As Biden is preparing for a re-election bid, the budget serves as a guide post for Democrats and a contrast to Republicans.”
Ahead of the budget, the White House has revealed that the plan will involve $3tn in deficit-cutting measures over the next decade — a sign that Biden wants to emphasise his credentials on fiscal responsibility after two years of significant spending with Democrats fully in control of Congress.
But the president wants to put the burden of that deficit reduction on the wealthy and large corporations, in a nod to the populist streak that has defined his economic policymaking since the start of his administration.
Even though he has struggled to pass much of his tax-hiking agenda, Biden will renew his call for a tax on billionaires, a quadrupling of taxes on share buybacks, an increase in taxes on the profits of hedge funds and private equity executives, and the elimination of tax breaks for oil companies and cryptocurrency transactions. He is also planning to call for an expansion of the government’s ability to negotiate drug prices for seniors.
Democrats believe these policies make good politics even if they have little or no hope of passing Congress, especially now that Republicans control the House of Representatives in the wake of the midterm elections.
They also hope that they will compare favourably to what House Republicans are expected to propose in their own annual budget proposal next month — and down the road, to whatever Republicans put forth on the 2024 campaign trail.
Congressional Republicans have already been pushing for plans that would sharply slash non-defence spending in order to balance the budget within 10 years, while keeping taxes low even for high earners, or even cutting them.
Meanwhile, the Republican party has been gripped by tensions that Democrats are trying to exploit between those who want to more aggressively reform and cut benefits for Medicare and Social Security, the huge healthcare and pension plans for seniors, and those who think it would be too politically perilous to touch them.
“These really will show two very different visions for how the federal government should operate within the US economy,” said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution, a Washington think-tank.
Biden’s budget last year involved $5.8tn in spending for the fiscal year that began in October 2022 and ends in September 2023 — and the White House has not said whether that top-line number will be higher this time.
However, the defence budget request is expected to be higher than the $816bn authorised for the Pentagon in the current fiscal year, as Biden tries to reassert US commitment to national security in light of the escalating strategic rivalries with both Russia and China.
This could also serve as a contrast to Republicans, who are divided about whether and how long to keep providing weapons and other forms of military aid to Ukraine.
But it is far from clear how much political advantage Biden can really extract from his budget proposal. Republicans in the House have already signalled that they intend to blast his plans as another spending binge that will fuel the price increases straining household finances.
It has not helped the White House that just this week, Federal Reserve chair Jay Powell said the US central bank was ready to raise interest rates further and for longer than expected if economic data continued to show that inflation was not coming down rapidly. This reignited fears that the US economy might not experience the “soft landing” the Fed and the White House are hoping for, but instead a much bumpier descent that could end in a painful recession.
“This economic sabre-rattling is not necessarily what voters are caring about,” said Ben Koltun, a policy analyst at Beacon. “The issues voters are caring about are inflation and a recession that could be coming.”