The United States of America’s budget for the fiscal year 2024 is out and aims to slash the deficit by almost three trillion dollars. The White House issued a statement asserting that the proposed budget would reduce the deficit by increasing taxation on rich Americans and corporations.
The budget provides for enormous spending on defence along with the provisions like paid family leave, universal preschool, etc. The proposed budget by Joe Biden includes defence spending of up to 842 billion dollars and 6 billion dollars as support to Ukraine for counteroffensive measures against Russia.
DEMAND FOR RAISING THE DEBT CEILING
In the US, there exists a legislative limit on the amount of national debt that is incurred by the US. This legislative limit is termed the debt ceiling. Republicans in the house wanted to raise the debt ceiling as they consider it necessary to escape a large economic default.
The same is the call by the Democrats but unlike Republicans, they do not want the debt ceiling to be tied to federal spending. The US House speaker Kevin McCarthy accused Joe Biden of avoiding talks on debt ceiling limits, although Joe Biden has refuted such claims. Biden went on to say that if McCarthy has his budget, he must lay it down before him so that they could enter into agreements.
The proposed budget allocates 25 billion dollars for the enforcement of immigration policies, 5 billion dollars for funding election assistance and 3600 dollars per child under the age of six, and 3000 dollars per child for older children under Child Tax Credit. Joe Biden in the budget proposes a minimum of 25% tax on billionaire Americans.
Biden has also proposed to reverse two tax cuts that were introduced during the regime of Donald Trump. Since Republicans are mostly against tax hikes, they term Biden’s budget proposals as dead on arrival. Biden’s budget has also been ridiculed as being reckless and accused of possessing far-left overtures which have led the country into a debt crisis and huge inflationary pressures.
McCarthy asserts that the humongous size of the country’s debt cannot be ignored and that a society that overextends itself is bound to collapse. A trust fund that funds Medicare, meant to provide health amenities to older adults in the US, is on the verge of exhaustion in about five years.
The White House has opined that the proposed budget by the President would effectively make Medicare last till 2050. The provisions of Medicare and Social Security take up a large chunk of the proposed budget but Joe Biden has sought to draw a red line on them. McCarthy too has put Medicare and Social Security off the negotiation tables in the upcoming sessions.
Biden’s idea portrayed through his proposed budget is to get high revenue from income that is not extracted from the salaries. If the proposal of tax break rollback is accepted then a person earning more than 4 lakh dollars per annum in America would be liable to be taxed at 39.6%.
Though the Biden Administration is keen on increasing taxes levied on the ultrarich, strong measures to curb tax evasion must be undertaken alongside. By putting a tight noose around the loopholes exploited by the taxpayers, revenue generation can be increased. This task of curbing tax evasion is always a daunting one for any government since the taxpayers, especially the ultrarich, always successfully devise mechanisms to escape their tax liability. In 2021, President Joe Biden rebuked the billionaires as well as corporations involved in tax evasion. How the tax regime in the US is streamlined would be worth observing.
The chances of the proposed budget becoming law are negligible with the Republicans having major control of the US House. This proposed budget reflects the points on which Joe Biden is expected to seek his presidential re-election.