Biden’s Big Speech Takes Aim at Trump’s ‘MAGA Agenda’

Biden’s Big Speech Takes Aim at Trump’s ‘MAGA Agenda’

Biden at last year's State of the Union
USA Today Network
By Yuval Rosenberg and Michael Rainey
Thursday, March 7, 2024

Happy Thursday! President Joe Biden is about to give his State of the Union address, scheduled for 9 p.m. Eastern. Here’s what to expect on some key fiscal points.

Biden’s SOTU Pitch: Tax the Rich and Businesses

President Joe Biden will deliver his State of the Union address to Congress this evening, and some political analysts are calling it the most important moment in his decades-long political career.

With just eight months to go before the election in November, Biden will make his case for another term, highlighting the country’s strong economic performance over the last few years, as well as his efforts to reduce drug and energy costs, while laying out his plan for the next four years. He will contrast his record and his vision for the future with the "MAGA agenda" of presumptive Republican presidential nominee Donald Trump, with that agenda defined as tax cuts for the rich, restrictions on political rights and the undermining of democracy.

In previewing the speech for reporters, the White House said Biden will lean into fiscal issues, including tax cuts for the middle class, tax increases for the wealthy, further investment in infrastructure and a plan to reduce the budget deficit by $3 trillion over 10 years.

Here are some of the proposals highlighted by the White House that we expect to hear about tonight:

* Increase the top corporate income tax rate to 28%, partially reversing the tax cut that occurred in 2017 during the Trump administration, when the top rate was dropped from 35% to 21%.

* Raise the minimum corporate income tax rate to 21% for major companies, up from the current level of 15% as set by the Inflation Reduction Act of 2022.

* Institute a minimum income tax of 25% for the wealthiest. As part of an effort to make sure that billionaires pay tax rates similar to those paid by other Americans, Biden is proposing a minimum tax rate for the wealthiest 0.01% of households, defined as those worth more than $100 million.

* Raise the Medicare tax rate on incomes over $400,000, as part of an effort to shore up the Medicare Hospital Insurance Trust Fund.

* Eliminate the deductibility of compensation costs for all employee salaries of more than $1 million a year, expanding restrictions already in place for top corporate officers. The White House says doing so could raise about $270 billion over a decade.

* Raise the tax on stock buybacks to 4%, quadrupling the current rate of 1%, to encourage companies to invest more in growth.

* Increase the Child Tax Credit, restoring the refundable credit that was in place during the pandemic.

* Make permanent the enhanced subsidies for health insurance purchased on the exchanges created by the Affordable Care Act, which are currently scheduled to expire after 2025.

* Renew the 2017 tax cuts for those earning less than $400,000 a year, while ending them for those who earn more.

Chart of the Day: Top Priorities

As President Biden makes his case for another term in office, the Pew Research Center reminds us that the top concern for most Americans is still the economy. "Nearly three-quarters of Americans (73%) say strengthening the economy should be a top priority for Biden and Congress this year," Pew’s Anna Jackson wrote Thursday in a review of recent polls that reflect public opinion on key issues.

High prices are a particular concern: "Majorities of U.S. adults say they are very concerned about the price of food and consumer goods (72%) and the cost of housing (64%)."

The polling data make it clear that Biden has a lot of convincing to do as far as the economy is concerned. Just 28% of Americans rate the economy as excellent or good, while 31% say it is poor and 41% view it as "only fair."

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House Republicans Advance a 2025 Budget Plan

Even as Congress tries to wrap up the drawn-out appropriations process for the 2024 fiscal year, which started back in October, lawmakers are also eager to turn the page to the 2025 budget. That process kicks off this month with President Joe Biden expected to release his request next week. House Republicans released their own budget resolution this week, and they passed it through the House Budget Committee after a markup hearing on Thursday.

An overview of the Republican plan: Republicans, led by Budget Committee Chair Jodey Arrington of Texas, say their plan balances the federal budget in 10 years, resulting in a budget surplus in 2034, and would reduce deficits by a total of $14 trillion over the coming decade. They insist they can achieve those savings through spending cuts and rosy projections of 3% annual economic growth, higher than other forecasts — and without cuts to Medicare, Social Security and veterans’ benefits. They would still have a bipartisan fiscal commission propose ways to preserve those programs while also addressing their long-term financial imbalances.

"Our deficit spending is out of control, our national debts are unsustainable, and the fiscal state of the Union is in rapid decline," Arrington said in opening remarks at the hearing. "Today, while President Biden talks about the State of the Union, Republicans on the Budget Committee today here in this room are taking action to revive the fiscal state of our union by passing our fiscal year ‘25 budget resolution, a budget blueprint to restore fiscal responsibility by reining in spending, reigniting economic growth and putting our nation on a path to balance."

Democrats warn of colossal cuts: Democrats countered that the GOP plan sells out American families by making huge cuts to crucial programs, including Medicare and Medicaid, all to protect the wealthy and corporate interests. "This MAGA budget is an assault on everything from health care to education. It would strip funding for food assistance for those in need, attack Medicaid, and make indiscriminate cuts to many government programs upon which Americans rely," said Rep. Brendan Boyle of Pennsylvania, the top Democrat on the panel. "Whether it's making it harder to put food on the table or keep shelter over your head, this budget does plenty of harm, and it does this all while paving the way for an extension of the Trump tax cuts, 83% of which went to the richest 1%."

Boyle also warned that the Republican budget only balances because of overly optimistic economic assumptions: "even after trillions of dollars in draconian cuts they make to programs that help the most in need, this Republican budget still doesn't balance. In order to achieve that, they jettisoned the assumptions of the nonpartisan Congressional Budget Office and other reputable sources to rely on astonishing predictions of economic growth that somehow creates three extra trillion dollars out of thin air."

What budget watchdogs say: The Committee for a Responsible Federal Budget, a nonprofit that advocates for deficit reduction, lauded Arrington for issuing a budget plan and doing it ahead of schedule, calling it a basic but important step.

"This budget includes many important objectives such as improving our fiscal trajectory, specific reforms to lower and equalize Medicare payments, acknowledgment that continuation of expiring tax cuts should be designed to be deficit neutral, calls to improve the budget process and reduce gimmicks, and a bipartisan fiscal commission," CRFB President Maya MacGuineas said in a statement.

But, she added, the plan is unrealistic. "The goal of reaching a balanced budget in ten years is completely unrealistic and counterproductive by perpetuating the myth that that is plausible. To get there, this budget combines genuine savings, which we applaud, along with large unspecified cuts — including to appropriations and improper payments — which will almost certainly not materialize. Aggressive assumptions about economic growth account for more than one-fifth of its savings. And while it is good that the budget calls for deficit-neutral tax policy rather than tax cuts, it lacks specifics on how expensive tax cut extensions will be offset."

The bottom line: House Republicans have laid down a marker. Biden’s budget is expected to be released on Monday. We’re not quite done with 2024 appropriations, but the 2025 budget season is heating up.

What do you want to hear in Biden’s big speech? Send your feedback to yrosenberg@thefiscaltimes.com. And please encourage your friends to sign up here for their own copy of this newsletter.

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