Biden's Multi-Trillion-Dollar Budget is the Biggest Increase in Decades

Mish

Biden unleashed his budget plans. Let's have a look.

Biden Hones Multi-Trillion-Dollar Budget

Biden rejected progressive spending plans but now Hones Multi-Trillion-Dollar Budget

Joe Biden won the Democratic presidential nomination running as a moderate, rejecting the big-government plans of progressive rivals as unaffordable.

The former vice president has proposed a total of $5.4 trillion in new spending over the next 10 years, according to an analysis published Monday by the Penn Wharton Budget Model, a nonpartisan group at the University of Pennsylvania’s Wharton School. That includes historically high allocations for sectors from education and health to child-care and housing.

Mr. Biden’s proposed budget is more than double that of Hillary Clinton, the 2016 Democratic nominee. It is a fraction of the $30 trillion to $50 trillion spending plans that progressive Sens. Bernie Sanders and Elizabeth Warren laid out during the Democratic primary. But since effectively sealing the nomination in March, Mr. Biden’s plan has grown in response to the pandemic, the lockdowns, and the resulting recession.

Federal Spending as a Share of GDP

Federal Spending as a Share of GDP - Biden Wharton

Penn Wharton Budget Model Key Points

  1. Over fiscal years 2021 – 2030, the Biden platform would raise $3.375 trillion in new tax revenue while increasing spending by $5.35 trillion.

  2. Under the Biden tax plan, households with adjusted gross income (AGI) of $400,000 per year or less would not see their taxes increase directly but would see lower investment returns and wages as a result of corporate tax increases. Those with AGI at or below $400,000 would see an average decrease in after-tax income of 0.9 percent under the Biden tax plan, compared to a decrease of 17.7 percent for those with AGI above $400,000 (the top 1.5 percent).

  3. The largest areas of new net spending are education at $1.9 trillion over ten years and infrastructure and R&D at $1.6 trillion over ten years.

  4. In total, including macroeconomic and health effects, the Biden platform increases federal debt by 0.1 percent in 2030 before decreasing debt by 1.9 percent in 2040 and 6.1 percent in 2050; GDP decreases by 0.4 percent in 2030, sees no change in 2040, and increases by 0.8 percent in 2050.

Tax Plan

  • Implement a Social Security “Donut Hole”,
  • Repeal elements of the Tax Cuts and Jobs Act (TCJA) for high-income filers,
  • Raise the top rate on ordinary income,
  • Eliminate stepped-up basis,
  • Tax capital gains and dividends at ordinary rates,
  • Limit itemized deductions,
  • Raise the corporate tax rate,
  • Impose a minimum tax on corporate book income,
  • Raise the tax rate on foreign profits,
  • Eliminate fossil fuel subsidies,
  • Eliminate real estate loopholes,
  • Impose sanctions on tax havens.

Those provisions are described in detail in PWBM’s analyses of the Biden’s original tax plan and his updated tax plan.

Progressives Happy - For Now

Party progressives, meantime, are satisfied—for now. “Where Biden has moved is an important set of steps forward,” says Washington Democratic Rep. Pramila Jayapal, the co-chair of the Congressional Progressive Caucus.  “Do we want more?” she says. “Absolutely.”

Regarding point 4 above, rest assured no federal debt decreases will ever happen and the deficit will be worse, no matter who wins.

And the Progressives will never be happy until they turn the US into a socialist mecca like Venezuela. 

Mish

Comments (60)
No. 1-19
Augustthegreat
Augustthegreat

In the digital age, money is just a stroke on the keyboard. The Fed can create infinite amount of money. So instead of giving free money only to the top 1% and corporations, more should be given to the average people. Universal Basic Income should be installed.

Felix_Mish
Felix_Mish

Projections for 2030, 2040, and 2050 are $3 bills in confederate money.

Demographers can project the future with remarkable accuracy. So, say, social security's cost in 2050 is a known dollar amount. But how much those dollars will be worth at the time is blindfold darts.

PecuniaNonOlet
PecuniaNonOlet

49 days till election. Do you know which candidate is more socialist?

Jojo
Jojo

It's just a proposal for the purposes of reaching HIS base, exactly the same as what Trump is doing. It would still have to pass Congress.

SunnyvaleCA
SunnyvaleCA

The more that Biden reveals, the worse for him. The far-left will say it's not enough and the moderates will say it's too much. Same thing is going to happen if Trump manages to goad Biden to publish a list of possible supreme court nominees. Normally, I'd say this would hurt Biden's turnout, but that's where the vote-by-mail comes in; lowers barriers for the lazy/disenfranchised. If you live here in California, you already know how door-to-door vote "harvesting" can cajole those ballots to get filled out and handed in.

CCBW
CCBW

So Trump is an A hole doesn’t speak or tweet presidential. Well Biden will come after my Roth IRA and say we have to tax that as capital gains. Also we need a wealth tax. You can vote for Biden I curse you with a minimum of forty years of life so you have to see how it worked out good luck. I’m a farmer and one thing I know as you plant so shall you reap. Well the seed I plant in November may be the best but the other seed isn’t worth feeding to the hogs let alone growing a good crop.

Casual_Observer
Casual_Observer

These are all just plans. The one thing we do know is budget deficit was trending down until Trump got into office. The TCJA from 2017 was a disaster for the budget and debt. Somehow the Republican party thinks bankrupting the government and states will be great for the economy and lower the deficit but it hasnt worked out.

purelogic
purelogic

Why are the democrats the ones who want to spend more on stimulus? I thought the way re-election logic works, the incumbent should want to spend more to get re-elected, while the democrats should be the ones raising budget concerns, so that the market tanks and Trump is voted out of office.

TonGut
TonGut

Ah! What a sly willy! There is a little more to it if you click to read the actual report. He is correcting the horribly regressive payroll tax, great job, but in low underhanded way. Instead of making it revenue neutral by eliminating the top threshold immediately and lowering the rate for lower incomes, he is instead creating a donut hole which will eventually disappear. Thus he is boosting payroll tax revenue by buying votes in the donut hole, those making between 137k and 400k.

Why not just eliminate the hidden portion of the payroll tax and give it back to the employee in exchange for eliminating the threshold? That would be more fair.

Anna 7
Anna 7

I heard Biden plans to increase military spending.

Friends, you can oppose nominal tax increases all you want. But, if they don’t raise tax rates nominally, they’ll just tax you more via inflation. Regardless of official method they favor to raise revenue, they’ll devote the same resources (as a % of GDP) towards war. If the commitment of resources doesn’t change, then in terms of future wealth creation there will probably be no difference between the DR candidates. (There will be nominal but not real differences.)

Both Demopublican wings also approve of private central bank opacity. Every day you complain about the Fed, that’s another day of inaction by whoever you voted for.

The two teams in this league are too alike in the ways we disapprove of. There’s no compelling reason to vote for either. Vote no-confidence by not voting. Any other decision tells the conmen you remain susceptible to the same tricks — so they’ll continue “business as usual “.

And start participating in third parties or independent campaigns. Stop spending so much of your time following a race rigged to feature only pro-war, pro-Fed candidates. We have to start fielding our own team.

FactsonJoe
FactsonJoe

It was Joe Biden who wrote and sponsored as Senator the bankruptcy laws that made student debt non-dischargeable in bankruptcy and therefore made student debt become forever-debt.

This led to banks and institutions giving out much larger dollar amounts in student debt easily and with practically not even a cursory look by the granter of the student debt if the student could even theoretically repay the student debt with the job prospects the students would have after studying the things they wanted to study and graduating.

This in turn led to colleges and universities hiking their tuition fees massively and offering all kinds of majors where unemployment after graduation or pulling lattes at Starbucks is much more likely than getting a well paid job from the area of expertise the student graduated with.

So Joe Biden is proposing to fix the problems HE CREATED with laws he wrote and sponsored by throwing more tax-payers money at it and making colleges and universities to be able to charge even more money for many times useless studies either from the student or tax-payers.

Can not get any more "politician" than that.

As a reminder after Joe Biden wrote and sponsored the current credit card laws and bankruptcy laws (that Trump has NOT fixed) Joe Biden's son Hunter Biden got a high position and huge salary and luxury office and with no apparent requirement to actually work from then largest credit card issuer MBNA which is based in Delaware and has now been bought by Bank of America.

That is a textbook example of corruption and in many other countries both Joe Biden and Hunter Biden would have been prosecuted after that after raids on MBNA offices and it would have been the end of Joe Biden's political career but in USA authorities did NOTHING and media just turned a blind eye and treated Joe Biden like "aww shucks it is just Joe" and celebrated him as a wise elder that sometimes says crazy things and he ended up becoming Obama's VP for 8 years and Republicans McCain and Romney and their VP candidates Sarah Palin and Paul Ryan were so feckless they did NOT even raise the issue.

ColoradoAccountant
ColoradoAccountant

Corporations don't exist. They don't eat or drink or sleep. Eliminate C corps and make them S corps. That means tax the stockholders who do eat and drink and sleep.

Herkie
Herkie

I agree that socialism is a slow creeping disease and I have posted enough on the subject to prove it. However we should not mistake the excesses and mania of crony capitalism that is if anything even sicker than socialism. It has gotten to the point where wealth inequality is the greatest threat to stability in the USA. In fact I believe that it is a threat to capitalism itself since capitalism requires a middle class willing to take risks in order to share in returns.

Wiki describes crony capitalism thus: "Crony capitalism is an economic system in which businesses thrive not as a result of risk, but rather as a return on money amassed through a nexus between a business class and the political class."

What they have just described is not even capitalism itself but fascism, and we are seeing the results in the form of brutal fascist repression tactics along with a divide and conquer strategy, and even that is coming more from the Kremlin than from Wall Street, but Wall Street encourages it because they envy the no holds barred wild wild west of unfettered mafia control of assets enjoyed by russian billionaires. In the meanwhile the average russian has no rights at all, and a much lower standard of living than Mexico.

Wall Street profits and the quality of life for the 1% are not the ONLY metrics by which we should be judging our government, economy, or overall success. There are some 327 million Americans sharing in well under half the assets while 3.3 million of us own the majority of assets. When those small minority of owners make an error it impacts us all, risk is far too thinly spread and we have discussed this over and over.

We have complained about short-term quarterly profit motivation for years. Looking to share prices in the next 90 days is no way to run a global economy.

I do not approve of socialism because it requires government to get ever deeper into your own decision making and freedoms, even where government has no business they make it their business, saying if you want income support, housing assistance, food stamps, etc. on and on, then you must comply with our rules, such things as forcing you to quit smoking or behaviors that used to be considered the sole discretion of the individual. Even when that is good for you like seat belt use coersion is still coersion. The socialist government simply cannot sit back and allow people to just live their lives as they see fit, the impluse to command obedience is just as ingrained in socialists as in fascists.

So, Biden's approach does not strike me as massive socialism on the scale of Australia, but taxing UNEARNED income at a normal income level is fine with me. If we are going to have income tax then that has to be both progressive on TOTAL INCOME and not just wages from labor, as well as taxing financial transactions so that we end the billion trades per second frontrunning by Wall Street banks which is pure cheating and you all know that. A simple postcard tax code would be fine with me as long as it is progressive.

A tax on financial transaction that rewards planning and holding equity, and rewards responsible bond holding is badly needed before all smaller issuing entities simply go out of business and we have 7 stocks left - FAANG and a couple others.

From an economic point of view "socialized medicine" AKA single payer, would be the equivalent of the biggest tax cut American business has ever had by far. Yet nobody on the right supports it, please explain this. They will often say they want to keep their doctor, and I assure you their doctor wants to keep them for most well off white Americans that are fortunate enough to have private for obscene profit healthcare insurance that asks few to no questions on fees and prices.

For those few remaining middle class/affluent/wealthy people who decry the advancing socialism (especially in regards to the HUMAN RIGHT to adequate and affordable health care) and who hate Mexicans, I want to point out the irony that the reason Mexico has so many uneducated, structurally impoverished, and desperate "excess population" coming north is they have the very same rules your republican party are pushing for. A paternaistic society with deep roots of superstition and religios bigotry, and which is no less intrusive into people's daily lives. You think a socialist economic system dictates your actions and behaviors? Just wait till your actions and behaviors are dictated by extreme poverty so that a very few can enjoy total sybaritic security.

What is happening in the nation today is only going to rapidly devolve into race and class wars that will not be fought with words or memes. And it would NOT be happening if justice was not for sale to the highest bidders with the vast majority locked out of the justice system. You cannot simply call 60 or 70 percent of the population "excess" and get rid of them, in mass incarcerations, via lack of care, or food, and NO your wealth does not make you better or more moral, poor people behave the same way you would if you were one of them. You can lie to yourself but you know deep down you are no different and that appalls and scares you.

Police state crackdowns may feel good for those who feel their entitled positions under threat but they will only make it worse, solve nothing.

Biden and his plans are the very best you can hope for if you want the nation to continue, and if you do not want it to continue then I condemn you as traitors. Though in that case I will get the last laugh because your feelings of moral superiority rest upon the number of dollars you have in your portfolio and when there is no more US Treausury will will have none. Everything you currently have requires the continuation of the US as a going concern economically and politically, upon the full faith and credit of the United States of America. You end that and you will find yourself as poor as everyone else, my bet is you are soft, do not know how to be poor or to compete in a free for all mafia world such as the russians are now enjoying. So you better be careful what you wish for.

BLUEWIN
BLUEWIN

Always spend more money when you are going broke . . .

magoomba
magoomba

This puny budget will be spent dry in just the first year.

Jackn
Jackn

Does Biden have a brain in his head? Doesn't he know that raising taxes raises prices? Doesn't he know that deficits and printing scads of money debases the currency. God help us in a high tax and high price world!!

Advancingtime
Advancingtime

And what will Harris Do?
Why talk about a Biden budget when Harris will most likely take over?
Just saying.

Carl_R
Carl_R

Over the last 60 years we have had a variety of different administrations in charge, and a variety of different tax structures in place. Some had very high top tax rates, some had low tax rates. Some were more complicated that others. In the end, the result has been amazingly similar. The net taxes collected has always been almost exactly 18% of GDP. If you collect 18% of GDP, and you spend 25% of GDP, do you have a taxing problem, or a spending problem?


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