President Joe Biden’s proposed $5.8 trillion budget aims to provide more money for police, education, public health and housing — while at the same time slimming the federal deficit.
In order to make the numbers add up, he intends to raise taxes on people earning more than $400,000 a year and is also proposing a minimum 20% income tax rate for households worth more than $100 million.
Unveiling his budget proposal on Monday, Biden said the issue was fairness.
“For most Americans, the last few years have been very hard, stretching them to the breaking point, but billionaires and large corporations got richer than ever,” said Biden. “Right now, billionaires pay an average rate of 8% on their total income — 8%, that’s the average they pay. Now I’m a capitalist — if you make a billion bucks that’s great — just pay your fair share.”
DePaul University economist Michael Miller says that Biden deserves credit for both sticking to his campaign pledges as well as seeking to raise additional tax revenue to pay for them.
“(Biden) does focus upon the kind of spending that he said that he would when he ran for president. And so he is keeping a promise with this budget,” said Miller. “And from an economic standpoint, at least he’s going to try to pay for it. He’s not going to do it by simply printing money or trying to borrow the money, although there will be deficits, he is trying to raise taxes while at the same time spending more.”
Biden’s proposed budget forecasts a deficit for fiscal 2023 of $1.15 trillion.
The proposed level of both spending and tax revenue raised would be above 50-year averages, said Miller “making government a larger part of the economy than it has been historically. But you have to give him credit. At least he’s trying to pay for what he wants to do.”
Despite soaring inflation that now stands at a 40-year high, driven in part by soaring energy prices following Russia’s invasion of Ukraine, Edward Stuart, professor emeritus at Northeastern Illinois University, says the U.S. economic outlook is bright.
“The key number — the one number I look at that’s even better than GDP — is employment. And employment has been growing robustly for the last several months,” said Stuart.
While he conceded that “Yes, there’s a little bit of inflation,” Stuart noted that it is still relatively low when compared to the 1970s and 1980s when inflation was running as high as 15 to 20%.
“So the inflation that we have, yes it’s difficult for people to manage slightly higher prices, but it’s a byproduct of a robust and growing economy,” said Stuart.
Miller also praised the strength of the market, although noting that higher inflation was a dampener on the economy.
“That is very troublesome to everyone. It’s like a giant tax and because of that consumer confidence is lagging,” said Miller. “But if you look at it in terms of the job market, we have as good of a job market as we have almost ever had in our history ... The economy is growing and it’s growing at a speed which is sustainable. People can find jobs. It’s just when they get to take their money home it doesn’t buy nearly as much.”