On The Money — Inside Biden’s $5.8 trillion budget

Happy Monday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here and view the full edition here.

Today’s Big Deal: We take you inside President Biden’s sprawling budget proposal. We’ll also look at the challenges facing the IRS ahead of the tax filing deadline and a potential tariff dispute.

For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Reach us at slane@digital-stage.thehill.com, afolley@digital-stage.thehill.com and kevers@digital-stage.thehill.com.

Let’s get to it. 

Biden proposes tax hikes, spending boosts

President Biden on Monday unveiled ambitious proposals to reduce the nation’s deficit over the next decade with tax hikes targeting the wealthy while outlining boosts for military and domestic programs as part of a $5.8 trillion funding plan. 

The White House says that the fiscal 2023 budget, which includes a tax hike on billionaires and other reforms, would reduce the deficit by over $1 trillion over the next 10 years.  

• Biden’s budget puts a strong emphasis on bolstering international and domestic security, calling for $773 billion in defense spending, a slight increase over the fiscal 2022 level, according to a White House fact sheet. It includes almost $1 billion in additional assistance for Ukraine as the country battles the ongoing Russian invasion, as well as $6.9 billion for the European Defense Initiative, NATO and countering Russian aggression.
• The budget also includes robust funding for domestic law enforcement programs, including $30 billion for state and local law enforcement, crime prevention and community violence intervention programs, as well as $1.7 billion for a Justice Department firearm trafficking strike force. Biden has showcased his support for law enforcement as he seeks to counter Republican efforts to paint Democrats as soft on crime. 
• Additionally, the proposal funds other administration priorities, like bolstering public health infrastructure amid the COVID-19 pandemic and fighting climate change. It would give $81.7 billion to the Department of Health and Human Services over five years to prepare for future pandemics and provide $9.9 billion to the Centers for Disease Control and Prevention to public health infrastructure and strengthen the workforce. 

Notably, the sweeping request avoids specific funding requests for Biden’s signature domestic policy proposal, Build Back Better, and instead includes a deficit neutral reserve fund as a placeholder for a future agreement between the administration and Congress. 

“Because those discussions with Congress are ongoing, the budget does not include specific line items for investments associated with that future legislation,” Office of Management and Budget Director Shalanda Young told reporters on a call Monday morning previewing the president’s request. 

The Hill’s Morgan Chalfant and Aris Folley have more here. 

BRUTAL BACKLOG

IRS faces steep climb in clearing old tax returns

Former IRS officials and experts are casting serious doubt on the agency’s ability to clear by the end of this year tens of millions of unprocessed tax returns delayed by the pandemic.   

IRS Commissioner Charles Rettig vowed to Congress last week that the agency would “absolutely” clear the backlog by the end of 2022, but operational demands that confounded the agency last year show no signs of letting up, raising questions about meeting the deadline. 

• The root cause of the backlog, analysts say, is the administrative workload the IRS has had to take on, in addition to being a tax collector, to distribute economic stimulus payments in response to the pandemic. 
• Total stimulus administered by the IRS, which consisted mostly of checks and direct deposits known as economic impact payments, was considerably higher in 2021 than in 2020. 

“The commissioner said that he commits [the IRS is] going to get through all of the returns by December of 2022, and I would love to see that, but I will be circumspect in thinking that that’s actually going to happen,” Nina Olson, who served as the national taxpayer advocate in the Treasury Department from 2001 to 2019 and is now executive director of the nonprofit Center for Taxpayer Rights, said in an interview. 

The Hill’s Tobias Burns has more here.

TARIFF TROUBLE

Feds to probe allegations Asian solar manufacturers skirted tariffs 

The Commerce Department on Monday announced an investigation into solar panels imported from four Southeast Asian nations for potential circumvention of tariffs, a move decried by industry groups as potentially devastating the industry. 

• Commerce announced Monday that it will respond to a petition from California company Auxin Solar. The complaint alleged the panels in question, assembled in Malaysia, Cambodia, Vietnam and Thailand, were intended to illegally evade U.S. regulations blocking Chinese imports. 
• The petition alleged the technology assembled in those four countries involves parts manufactured by Chinese companies, and that their manufacture violates decade-old antidumping and countervailing tariffs on Chinese imports. 

The Hill’s Zack Budryk has more here. 

Good to Know

President Biden is proposing funding increases for the Federal Trade Commission (FTC) and the Department of Justice’s (DOJ) antitrust division as part of his $5.8 trillion proposal released Monday. 

Biden’s budget would increase the DOJ’s antitrust division funding by $88 million and the FTC funding by $139 million. 

Here’s what else we have our eye on: 

• FedEx founder and CEO Fred Smith plans to step down from his leadership role within the company and serve as executive chairman.  
• The New York Supreme Court on Monday ordered the Trump Organization to comply with a subpoena issued by the New York attorney general’s office within the next month. 

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.