President Biden to release budget proposal with tax and spending policies
President Joe Biden is expected to release his proposed budget to Congress on Monday as he outlines his preferred policies and ramps up his re-election campaign.
Biden's budget proposal will serve as a key plank of his campaign platform as he seeks a second term in November's election. Presidential budget proposals tend to serve primarily as a blueprint for preferred policies and a messaging tool, and Congress typically declines to enact them wholesale.
The budget release also comes days after Biden delivered his State of the Union address, which previewed a number of provisions that will likely be included, and six weeks after it was due to be submitted under the Congressional Budget Act.
In his address, Biden called for tax credits to help certain homebuyers and sellers in an effort to address housing affordability. The proposed credit would provide middle-class, first-time homebuyers with an annual tax credit of $5,000 a year for two years, which the White House said was the equivalent of cutting interest rates by more than 1.5 percentage points on the median-priced home.
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Biden is also looking to encourage homeowners to sell "starter homes" to first-time homebuyers by proposing a one-year, $10,000 tax credit that would apply to homes below the median home price in a given area. The credit is intended to serve as an incentive for homeowners who are locked into low mortgage rates by helping to offset higher mortgage costs that await with a new home purchase.
The administration said in a fact sheet the credits would aid 3.5 million first-time homebuyers and 3 million sellers, which would cost about $65 billion over two years. Biden is also expected to call for the expansion of the low income housing tax credit and a $20 billion grant fund for the development of affordable multifamily rental units, the White House said.
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During the State of the Union address, Biden called for the reinstatement of the expanded child tax credit that was temporarily broadened during the COVID-19 pandemic to pay eligible families up to $3,600 a year per child. He also called for the expansion of the earned income tax credit for low-wage workers.
Another item that's expected to be included in the president's budget is the "billionaire tax" proposal the president has advanced previously. The proposal would impact many millionaires below that threshold by imposing a 25% minimum tax for Americans with wealth of more than $100 million.
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He also pledged during the State of the Union to extend Trump-era tax cuts for those earning $400,000 a year. The president also called for higher taxes on corporations, including an increase in the corporate minimum tax rate on companies reporting over $1 billion in profit from 15% to 21%.
The White House has also signaled that Biden plans to allow Medicare to negotiate prices for at least 50 prescription drugs instead of 20.
Biden's budget is expected to include a 1% increase in defense spending to $849.8 billion for fiscal year 2025, according to a report by Bloomberg News. The move comes in response to budget caps enacted a year ago under the Fiscal Responsibility Act.
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The smaller than anticipated spending boost is about $10 billion less than the administration had forecast it would seek for FY2025 and would reduce orders for F-35 fighters and Virginia-class submarines, according to the report.
Reuters contributed to this report.