March 30, 2022

Biden’s Budget

President Joe Biden announced a budget blueprint Monday that calls for higher taxes on the wealthy, lower federal deficits, more money for police and greater funding for education, public health and housing… There would be $795 billion for defense, $915 billion for domestic programs, and the remaining balance would go to mandatory spending such as Social Security, Medicare, Medicaid and net interest on the national debt.”

AP News

“The budget proposes that households worth more than $100 million pay at least 20% in taxes on both income and ‘unrealized gains’— the increase in an unsold investment’s value.”

AP News

See past issues

From the Left

The left is generally supportive of the budget, but urges additional spending on social programs.

“[National Review notes that] ‘The top 1 percent make about 20 percent of all income but pay 40 percent of the federal income tax — their income-tax burden is twice their share of income.’ This misleading statistic is a favorite of plutocrats, but it is deeply misleading…

“Yes, the federal income tax is highly progressive. But the income tax is just one component of the federal tax code, and the federal tax code is just one component of the total tax code. Other federal taxes, as well as state and local taxes, are far more regressive, and Republicans are busily working to make them more so. If you look at the total redistributive effect of the tax code, it is quite modest…

“There are several reasons why the tightly drawn class warfare between the two parties tends to recede into the background of the political debate… But the banal fact remains that redistribution in general, and taxing the rich in particular, remains the primary ground the two parties are fighting over on a daily basis. The best thing Biden can do for himself is to remind people of this.”

Jonathan Chait, New York Magazine

“With Ukraine in turmoil thanks to a Russian war of aggression and the world's stability threatened by an ascendant China, it makes sense that Biden would need a well-funded military. What makes less sense, though, is such robust military spending coupled with claims that the country can't afford robust and necessary social welfare programs…

“The need for the basic social support systems on offer in most of our economic peer nations -- affordable child care, universal health care, paid parental leave, even paid sick days -- became devastatingly clear when Covid-19 upended life as we knew it… Families need more than more affordable milk at the market; they need jobs that pay fairly, high-quality care for their children and their elders, and the ability to go to the doctor when they're sick without bankrupting themselves.”

Jill Filipovic, CNN

Some note, “China spends only a third of what we do [on defense]. Russia’s military budget is around 8 percent of what ours is — yes, 8 percent. So how would spending $900 billion or $1 trillion a year thwart Putin’s imperial dreams in a way that $800 billion a year won’t?…

“There are differences of opinion about the Biden administration’s response to Russian President Vladimir Putin’s invasion, but one thing we’re not facing is a lack of resources. For instance, we’ve chosen not to establish a no-fly zone over Ukraine because the administration believes (rightly) that it could lead to World War III. It’s not because we don’t have the means to do so if we chose. That’s today, you might say, but what about tomorrow? Well, ask yourself: What precisely is the question the Ukraine war raises for which the answer is, ‘We have to spend more money’? What would we like to do that we don’t currently have the budget for?”

Paul Waldman, Washington Post

From the Right

The right is critical of the budget and argues the proposed taxes are unworkable and unfair.

The right is critical of the budget and argues the proposed taxes are unworkable and unfair.

“It’s hard to observe wealth: the IRS does not collect information on it, many assets held by rich people are tricky to value (such as fine art), and the value of wealth can be volatile (consider the Bitcoin millionaire). Taxing wealth also encourages people to shift their assets abroad or into difficult-to-value assets, or simply to understate what their wealth is worth. Many European countries have given up taxing wealth, and those that do impose wealth taxes derive only a small share of revenue from them…

“How the IRS will determine which households are worth $100 million is unclear; the agency does not have the capabilities or manpower to do such a thing. And considering the volatility of markets, on what day would this income be assessed? If you lose money, do you get a credit? Why is it called a ‘billionaire’s tax’ when it applies to millionaires, too? What types of assets will be subject to it? So far, no answers have been given to these questions, likely because no good ones exist.”

Allison Schrager, City Journal

“There are a few obvious problems with Biden’s latest folly. The first and most obvious is that the wealthy already pay a lot more than their proportionate share of federal income tax: According to IRS figures, the top 10 percent of households by income already pay more than 70 percent of all federal income taxes, though they collectively earn less than half of all income. The top 1 percent make about 20 percent of all income but pay 40 percent of the federal income tax…

“If the Democrats want a Scandinavian-style welfare state, then let them propose Scandinavian-style taxes, too. What’s different about the United States compared to the European welfare states admired by our progressives is not taxes on the very wealthy but taxes on those in the middle and upper-middle…

“In the United States, a married couple earning $110,000 a year (1.5 times the median household income) would pay a top marginal rate of 22 percent; in Sweden, the equivalent couple (earning 1.5 times the median income) would pay 57.2 percent, a little more than two and a half times as much.”

The Editors, National Review

“The president’s budget includes $773 billion for the Defense Department, an increase of $30 billion over what Congress enacted last year (which was itself $29 billion more than the president had asked for). That request is certainly a lot of money, equivalent to about 3.9 percent of the U.S. economy…

“[But] 3.9 percent of GDP is roughly what the defense budget was in 1995, after the peace dividend and reduction in forces that followed the end of the Cold War, when international tensions were much lower than they are now. The budget for defense (excluding funding for the intelligence community and the Department of Energy, which is responsible for America’s nuclear weapons) also assumes that inflation for the coming fiscal year will be only 2.3 percent, but inflation is running at 7.5 percent. So the Department of Defense is losing ground to inflation.”

Kori Schake, The Atlantic

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