5 things to know about Biden’s more centered ’23 budget plans

President Biden on Monday unveiled sweeping plans for military and domestic spending as part of his annual budget proposal that also includes tax hikes on the wealthy.

The $5.8 trillion budget request released early Monday morning calls for investments in policing, historic spending boosts for education and tax reform targeting billionaires and wealthy corporations.

Here are five things to know.

 

Budget tiptoes around Build Back Better

The budget does not include line items from Biden’s signature “Build Back Better” proposal, a decision administration officials said was made to give room to talks with Congress.

At the same time, officials made clear that Biden wants to see lawmakers pass a bill that addresses elements of Build Back Better that would lower health care, child care and other costs for families.

The fate of Biden’s domestic policy agenda was thrown into doubt late last year when Sen. Joe Manchin (D-W.Va.) said he could not support the House-passed version.

Administration officials have been tight-lipped about the status of negotiations, wary of disagreements spilling into the public as they did last year.

“An easy way not to get anything done is to negotiate in public,” Office of Management and Budget (OMB) Director Shalanda Young told reporters Monday afternoon. “We’re not going to do that.”

Bill Hoagland, senior vice president at the Bipartisan Policy Center, said that the budget “reflects a little bit more reality of what is possible” and also that the inclusion of a reserve fund for the programs is an “important signal they haven’t given up on Build Back Better or some orphan of Build Back Better.”

 

“Pay their fair share”

Biden’s second budget blueprint puts plenty of focus on deficit reduction but largely relies on tax hikes to do so.

Biden proposed a minimum tax on multibillionaires and billionaires that the White House’s budget office said in a fact sheet on Monday would “apply only to the wealthiest 0.01 percent of households.” OMB estimated the change would ensure the households pay at least a fifth of their total income in federal income taxes.

The proposal calls for the top individual tax rate to be raised from 37 percent to 39.6 percent. And the request also renews a push by top Democrats to raise the corporate tax rate to 28 percent, after it was previously shaved down to 21 percent under the Trump administration in 2017. That idea faces challenges in the Senate, where Democrats hold a slim majority.

Party leadership had hoped to raise the tax rate to 28 percent last year as part of Biden’s larger Build Back Better plan using a procedure known as budget reconciliation, which would have allowed Democrats to bypass a likely GOP filibuster in the 50-50 split Senate. But the push hit a roadblock in the form of Sen. Kyrsten Sinema (D-Ariz.). Most Republicans also oppose the proposal.

The request additionally outlines a proposal to prevent multinational corporations from using tax havens to undercut the global minimum tax. 

 

Emphasis on security funding

Biden proposed $30 billion in new mandatory funding for state and local law enforcement, crime prevention and community violence intervention programs and $1.7 billion for a Justice Department gun trafficking strike force convened last year.

The funding request is consistent with Biden’s rhetoric supporting police over the past year.

“The answer is not to defund our police departments, it’s to fund our police and give them all the tools they need,” Biden said in remarks on Monday.

The White House has pushed back against Republican arguments that Biden and Democrats are soft on crime, while breaking with more progressive views about scaling back police funding. Asked by a reporter Monday if the proposal was a response to GOP pressure, Biden answered “no.”

Amid Russia’s war in Ukraine, the budget also seeks additional funding to assist Ukraine, combat Russian aggression and bolster NATO. It proposes $773 billion in funding for the Pentagon, an increase over the previous fiscal year.

Biden said the boost is necessary to invest in advanced capabilities and compete with nations like Russia and China in venues like space.

“Some people don’t like the increase, but we’re in a different world today,” Biden said.

 

Advancing racial equity

The budget request aims to advance racial equity in areas spanning education, health care and public assistance. 

The Biden administration said the request calls for historic investments for K-12 schools, doubling the funding for Title I grants for schools as part of a larger effort by the president to address “long-standing funding disparities between under-resourced schools — which disproportionately serve students of color — and their wealthier counterparts.”

Biden also seeks to double the maximum award amount for Pell Grant recipients by 2029. The move comes after the maximum amount saw an increase in the $1.5 trillion omnibus spending package that passed Congress earlier this month.

According to the Education Data Initiative, Black students were most likely to receive the grant, which is awarded based on financial need, between 2015 and 2016, and Asian and Pacific Islander students were most likely to receive the highest award amount during the same period.

The budget request calls for $470 million to be put toward reducing maternal mortality rates, implementing bias training for health care providers and addressing high rates of perinatal disparities, among other proposals, while noting the “unacceptably high mortality rate for Black and American Indian and Alaska Native women.”

It also touts measures aimed at advancing child and family well-being in the welfare system, including efforts seeking to reduce the overrepresentation of families of color in the child welfare system.

 

A budget for the moderates

Some viewed the budget, and particularly the focus on deficit reduction and combating crime, as an effort by the White House to play to the middle. Biden has long described himself as a centrist, but his sweeping policy proposals last year contained many progressive priorities.

Biden’s second budget release comes in a midterm election year, at a time when he is facing growing angst among the public about high inflation and a difficult road to passing his remaining domestic priorities.

“I do think this does recognize that after 12 months of a rather extensive, progressive agenda, this does recognize you have to be a little more middle of the road and maybe a little more bipartisan,” Hoagland said.

Speaking to reporters Monday, House Budget Committee Chairman John Yarmuth (D-Ky.) said it was “fair” to argue the White House sought to placate concerns of Manchin with the recent request’s focus on deficit reduction.

“I think the emphasis on deficit reduction was something that was designed to mollify Sen. Manchin,” Yarmuth said.