America's Talking - Biden Touts New Budget With Tax Hikes, Critics Push Back

Episode Date: March 10, 2023

President Joe Biden released his 2024 budget Thursday that includes a trove of tax hikes, quickly sparking pushback from critics. The White House said the budget will cut deficits by nearly $3 trillion over the next decade. Critics argued that despite those cuts, the national debt is still soaring, projected to surpass $50 trillion in the next decade. The Committee for a Responsible Federal Budget said despite Biden's claims, U.S. Gross Domestic Product would increase from 98% at the end of this year to a record 110% by 2033. --- Listen to Other ATN Productions: America's Talking: An interview podcast hosted by Austin Berg. Guests include professors, journalists, artists, business and nonprofit leaders, authors, and more. Everyday Economics: Join economist Dr. Orphe Divounguy and Chris Krug as they discuss global markets, inflation, and everything else that will help you understand the economic world around you. Future of Freedom: Future of Freedom is a bi-weekly podcast highlighting the work of the non-profits which are shaping the future of the freedom movement. Listeners will hear civil, intellectual conversations about why the organizations exist, what their mission is, and how they work to achieve it. Hosted by Scot Bertram. Support this podcast: https://podcasters.spotify.com/pod/show/america-in-focus/support Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to America in Focus. I'm Dan McAulip, executive editor of the Center Square Newswire Service. Joining me today, as usual, is Casey Harper, the Center Square's Washington, D.C. Bureau Chief. This week, President Joe Biden introduced his spending plan, his budget proposal that includes tax increases, but that he says will reduce the deficit over 10 years. Critics say that proposed tax increases will hurt the economy and that he doesn't do enough to reduce the deficit. Tell us, give us some more details here. Yeah, this is interesting. As you said, Biden is claiming this will cut the deficit by $3 trillion, cut deficits by $3 trillion over the next 10 years.

He focuses a lot on deficits because, of course, I think people know, but deficit, a deficit is basically the money added to the national credit card every year, right, the money where we are in surplus that we spend more than we make, that we, you know, you could say live beyond our means. So that's kind of the debt we accrue each year. which is separate from the overall national debt, which is nearing $32 trillion right now. So the overall, you know, it's a little bit slight. It can be a slight of hand if people don't quite pay attention closely because cutting deficits

doesn't mean you're actually cutting the debt. The debt is still increasing even with these deficit cuts. Anyway, there are deficit cuts, though, and of course, deficit cuts are better than deficit increases. And Biden's very proud of those. He's also touted a lot of the line out of things that pays for, Social Security, Medicare, that kind of stuff. But as you said, there's some real tax increases. Now, Biden has, and his administration has said time and again that if you make a less than $400,000, you won't be paying additional taxes. And he's been really proud of that. But some of these small business tax increases are definitely going to impact regular Americans who are making, you know, not wealthy Americans, I guess I'll say. And we can get into that more in a minute. But the other top line item is that Biden's budget also pours another 43 billion. into the IRS, which we know we've been debating and talking a lot about on this podcast about how

the $80 billion from the Inflation Reduction Act would be used in this army of auditors. So he's increasing it another 40 billion, which is another 50% of what the last increase was. So, of course, the IRS has its own issues and, you know, recent history of being biased against certain groups. So there's a lot in here, as presidential budgets are, as they go, it's kind of, they're mammoth, they're huge, they're kind of hard to read through the whole thing. And at the same time, they're really important. the agenda, but they also are not as consequential because presidential budgets never get accepted wholesale, right?

This is more of a messaging. This is setting the priorities. It's very likely that some of these items will be included in Biden's agenda going forward. But Congress doesn't just, okay, okay, we're going to pass this. They create their own. They incorporate some of the president's things. And so any final budget would look a lot different. But not that Congress really passes budgets anymore. They just do these deadline continuing resolutions nowadays. Right. And that's, that's, that's, looming right in May, Congress will have to raise the debt limit or face defaulting on that debt, according to analysis of Biden's budget proposal from a committee for a responsible federal budget, a nonprofit group that looks at federal spending. The president's budget would borrow $19 trillion

through to 2003. As you mentioned, up top, the federal debt is approaching $32 trillion. So in just 10 years, that could be more than $50 trillion. Yeah, that's right. I mean, that's almost certainly going to happen. We're seeing that you're spending trajectory, unless the next administration comes along and does something drastic. That's where it's headed. And we wrote about this at the Soonerscore.com, but the spending on the interest payments on the national debt is going to surpass spending on national defense then. Just having the debt is going to be more expensive to us than all the tanks, everything, aircraft, all the,

soldiers pay, all that combined. We're going to be spending more just to keep up with our debt than we spend all of our national defense. That can't be healthy, I wouldn't think. What's the breaking point when it comes to amassing such debt? You know, we don't know the breaking point. That's kind of what allows everyone to just keep going on. You know, we don't know if the Titanic has struck the iceberg yet, you know, famously after they struck the iceberg, they continued partying on, unaware that they were already sinking. And so we don't know if we've hit that iceberg if we're starting to sink. And there's never really been a modern economy like ours that has so much global control that is so large that is able to withstand economic shocks. You know, we have so much, so many natural resources

here in the U.S., even food resources as well, that we're able to, could be self-sustaining in some kind of crisis. But we're in uncharted territory. You know, I talked to experts about this, and nobody really knows our, you know, debt surpassing GDP was kind of a red line when your debt is, you know, getting, but we're getting there. And it's like, okay, nothing is, you know, we haven't sunk yet. So we're not going to know until it's too late, probably. And the thing is, the global economy is so interdependent. And everyone else isn't so much debt that it's just we're in a weird global economic place. But you're right. It can't be good. And I think it's very fair to say it's not sustainable. We don't know when this whole thing is going to blow up, but you can't, you can't keep

barring. I mean, we've known people who are in, you know, just on an anecdotal level. We've probably known people who are in a lot of debt. And when your interest payment is, you know, more than your mortgage, then, I mean, how can you live like that, right? Right. Briefly just to tell us about what are the proposed tax increases. Yeah, I mean, there's a lot. And we probably can't go into detail on all of them, but there's a billionaire's tax. There is raising the corporate tax rate from 21% to 28%. The, there's raising the marginal, the top marginal income tax rate to 39. So if you're in that top bracket, you'll be up to almost 40%. And then there's a lot of, you know, there's small business taxes and houseways and means

they put out kind of some bullets of these this morning. And they included a small business surtax that hits owner operated small businesses with a $650 billion tax hike. There's an additional $235 billion in taxes through an increase in the top individual tax rate for LLCs as corporations and partnerships. There's a million small businesses that fit into that C corporation. category that will face a tax rate that's much higher, which I kind of alluded to. And of course, all these tax hikes that the president proposes for businesses small and large,

that's really a backdoor tax critics would say on consumers. Because businesses to make up for that, they're going to increase prices. They're going to lay off workers. They're going to reduce hours and benefits maybe. They're going to pass those increased tax costs off on the rest of Americans. And so that's, as I said, it's like a backdoor tax on everybody. Right. I mean, it is.

And there's also increased debt tax. But, you know, the thing about small businesses, they can be an anchor in a community. And so there's a, there's a very big gap between what you hear a lot of Democrats talk about in regards to, you know, making billionaires pay their fair share versus the guy who owns a successful hardware store in a small town. And technically, you know, is considered a corporation because he, you know, he's making enough money. then he has maybe 20 employees or something and they all have families.

And so he's integral success of that community. And so when you hit someone like that, you're hitting a community and it's not the same thing. It's just making billionaires pay their fair share. Right. Of course, this is just the president's budget proposal. It still has to work its way through Congress where Republicans have a slight majority in the House.

Democrats have a slight majority in the Senate. So I'm sure there's going to be a lot of back and forth before we get to a final budget. But Casey, thank you for your insight into this story. Listeners can keep up with Casey's reporting on the federal budget, on federal debt and deficits at DcenterSquare.com. For Casey Harper, I'm Dan McAid. Please subscribe and thank you for listening.