Mar 13, 2024

Biden's 2025 budget proposal.

Biden's 2025 budget proposal.
(DoD photo by Lisa Ferdinando)

Plus, we revisit East Palestine, Ohio.

I’m Isaac Saul, and this is Tangle: an independent, nonpartisan, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”

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Today's read: 12 minutes.

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President Biden released a budget proposal for 2025. Plus, we revisit East Palestine, Ohio.

ICYMI.

In our Sunday Edition this week, we published an essay from a practicing physician going by Anonymous MD about his experience and perspective as a small-government religious conservative and transgender man. The essay was provocative, challenging, honest, and deeply illuminating. 

We normally make reader essays available only to Tangle members, but due to the overwhelmingly positive feedback have decided to make the essay publicly available and shareable. You can read it here.

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Quick hits.

  1. BREAKING: The House of Representatives voted 352-65-1 in favor of a bill that would force a sale of TikTok or ban it from U.S. app stores. The bill now heads to the Senate. (The vote)
  2. President Joe Biden and former President Donald Trump officially clinched enough delegates to win their parties' respective nominations, setting up the first presidential rematch since 1965. The election is now 237 days away. (The rematch
  3. In testimony before Congress on Tuesday, Special Counsel Robert Hur defended his decision not to prosecute President Biden and his characterization of him as a "well meaning, elderly man with a poor memory." (The testimony
  4. Rep. Ken Buck (R-CO) announced he will resign next week, further narrowing Republicans’ thin House Majority. (The announcement
  5. The Biden administration announced a new $300 million aid package for Ukraine on Tuesday. A larger package for Ukraine is still stalled in Congress. (The package
  6. BREAKING: The judge overseeing the election interference case against Donald Trump in Georgia dismissed six counts against Trump and his 18 co-defendants, saying the state failed to provide sufficient detail for the counts relating to soliciting an elected official to violate their oath of office. (The dismissal)

Today's topic.

Biden's budget proposal. On Tuesday, President Joe Biden released a $7.3 trillion budget proposal for 2025, which if enacted would raise taxes on the wealthy and large corporations, lower the costs of prescription drugs and housing, and trim the deficit.

Reminder: Budget proposals are aspirational, and are rarely enacted in full. This one is very similar to the budget Biden proposed last year, which didn't gain traction in Congress. Administrations typically release their budget proposals as a mission statement for their plans for the upcoming year, and then begin selling their ideas to the public while whipping votes in Congress in an effort to get legislation enacted to meet their budget.

With a Republican-controlled House and a divided Senate, this proposal — which sets spending and revenue plans for a decade — is unlikely to become law. But Biden is expected to make it a cornerstone of his 2024 campaign.

What does it do? Among other things, Biden's budget calls for the following:

  • Raises an additional $4.9 trillion from taxing the wealthy and corporations, an increase of about 7%
  • Cuts the deficit by $3 trillion over the next decade, using a combination of taxes on the wealthy and corporations along with allowing the government to more aggressively negotiate prescription drug prices
  • Spends $895 billion on military programs in the upcoming fiscal year, up from $886 billion this year
  • Lowers taxes for those making less than $400,000 per year by $765 billion over a decade
  • Raises the corporate tax rate from 21% to 28%, reversing cuts from President Trump’s Tax Cuts and Jobs Act
  • Quadruples the 1% tax on stock buybacks introduced in 2023
  • Requires billionaires to pay at least 25% of their income in taxes
  • Increases the highest individual income tax rate to 39.6%
  • Expands the Earned Income Tax Credit to workers with incomes below $64,000 annually to include more taxpayers without children
  • Guarantees subsidized child care for families making less than $200,000 per year
  • Creates voluntary, free preschool for all 4-year-olds
  • Builds or preserves more than two million housing units
  • Offers a $10,000 tax credit to first-time homebuyers and current home owners to help offset the cost of purchasing a home
  • Expands the number of drugs subject to price negotiation under Medicare from 20 a year to a maximum of 50
  • Includes $4.7 billion emergency fund for border security in the event of a migrant surge
  • Reinstates the expanded child tax credit through 2025

There is a lot in the proposal, but also some notable absences. While it moves to ensure the solvency of Medicare by increasing taxes on wages, investment gains and self-employment income of earners making over $400,000 per year, it only lists some ideas for shoring up Social Security without detailing any specific plan. It calls for extending President Trump’s tax cuts for most households without specifying how it will pay for them. And although it calls for expanding the child tax credit, it does not factor in its cost after 2025.

Even if the plan were followed to the letter, the administration's own estimates would push federal revenue as a share of the economy to 20%, a level reached only once in U.S. history — during World War II. The U.S. would still have historically high budget deficits averaging about $1.6 trillion per year. The budget also assumes that inflation will fall to the Federal Reserve's target of 2% by 2025 while interest rates stay elevated for several years. 

Today, we're going to examine some arguments about the budget from the left and right, then my take.


What the left is saying.

  • The left thinks Biden is smart to tailor his budget toward political issues that are favorable for Democrats. 
  • Some say the Biden plan is preferable to Trump’s but still falls short of being fiscally responsible. 
  • Others criticize the proposal’s increased military spending. 

In The New Yorker, John Cassidy called Biden’s proposal “an explicitly redistributive budget for an election year.”

“The key political takeaway is that the White House is determined to frame the upcoming contest between Biden and Donald Trump as a choice between a Democrat fighting for the American middle class and a Republican stooge for the plutocracy,” Cassidy said. “In economic terms, the budget amounts to an effort to expand the social safety net and, simultaneously, reduce the federal deficit by raising tax obligations for the richest two per cent of American households—and particularly the very, very wealthy, who have prospered greatly in the past few decades.”

“The budget contains a number of different proposals to roll back elements of the 2017 Republican tax cuts, many of which are due to expire at the end of 2025,” Cassidy added. “These measures would be accompanied by others designed to raise taxes on big businesses and high earners… the Biden campaign would be delighted to spend the next eight months debating whether the economic priority should be expanding the federal tax base by forcing the top one or two per cent of households to pay more, as Biden has suggested, or cutting entitlement spending and preserving the tax cuts for the rich.”

The Washington Post editorial board said “Biden’s budget is a lot more realistic than Trump’s.”

“President Biden’s fiscal 2025 tax and spending blueprint is more of a political statement than an actual legislative proposal. Basically, it’s a reelection pitch straight from the ‘Middle Class Joe’ playbook he ran on in 2020: raise taxes on the rich and businesses and spend much of the proceeds on federal support for child care, health care and housing,” the board wrote. “These traditional Democratic priorities failed to become law even when Mr. Biden’s party narrowly controlled Congress, so there is zero chance of enactment now.

“Considered differently, however — as a reminder of how another four years of Mr. Biden in the White House would be unlike a second term for likely GOP nominee Donald Trump — the document has somewhat more meaning,” the board said. “Mr. Biden’s tax plan would be fairer and more fiscally responsible than Mr. Trump’s. The longer version is: Despite this reality, the country needs a reckoning on its unsustainable budgetary path, and Mr. Biden’s proposals, though better than the alternative, do not envisage one.”

For The National Priorities Project, Lindsay Koshgarian criticized that “militarized funding in [the] Biden budget totals well over $1 trillion.”

“According to the administration’s figures, militarized funding in the proposal totals $1.1 trillion for FY 2025,” Koshgarian wrote. “That’s not all the militarism in the budget. In reality, the spending on militarization in this budget is even higher. These figures, which come from the administration, treat the militarization of domestic law enforcement — things like the domestic work of the FBI, federal marshalls, and grants to local law enforcement agencies — as domestic expenses.”

“And it doesn’t include war spending. Just as important, the proposal includes only $12 billion for direct international military aid, and nothing for the Pentagon’s operations in support of various wars. That’s highly unrealistic given current administration policies,” Koshgarian said. “Unless the administration changes approach, these wars will continue to cost us. The administration hasn’t been making visible efforts to end the war in Ukraine, nor has it responded to demands that it withhold military aid to Israel… There’s not enough left for programs we need.”


What the right is saying.

  • The right is broadly critical of the budget, questioning the necessity of higher levels of government spending. 
  • Some push back on Biden’s strategy of raising taxes to boost government revenues. 
  • Others note contradictions between how the White House is describing the bill and what it actually contains. 

In National Review, Dominic Pino asked “if the economy is so great, why does Biden want another huge budget deficit next year?”

“Why is federal spending continuing to increase after the pandemic is over? There was a reasonable economic argument to run a deficit during the pandemic to make up for government-imposed measures that kept people from working. But the U.S. spent far more on pandemic relief than most other countries. And now, years after those excuses might have made sense, spending has not receded,” Pino wrote. “There’s one relatively straightforward answer here: It’s an election year.”

“Another explanation, though, could be that the Biden administration might believe that part of the reason for U.S. overperformance during the Covid recovery was the massive government spending that the U.S. did, which was more than in other countries,” Pino added. “That can produce good-looking numbers in the short term, but if the growth is largely due to government spending, then government spending needs to continue for the growth to continue. Economies that are actually thriving don’t need a federal government spending $1.8 trillion more than it is taking in.”

In RedState, Mike Miller said Biden “absurdly believes he can spend America to prosperity.”

Biden is “predictably calling for $5.5 trillion in massive tax increases by raising rates on the wealthy and corporations — while driving up spending on federal benefits programs, affordable housing, and student loan cancelation (transference of contractual debt to taxpayers), among other so-called ‘progressive’ schemes,” Miller wrote. “In other words, the same old Democrat tax-and-spend policy. Before we continue, ask yourself this question: Can you think of a single country or government that has spent its way to prosperity?”

“As Democrats are wont to do, after the absurd proposal goes down in flames in the House, they will scream bloody murder and accuse the heartless Republicans — including Donald Trump, of course — of all kinds of horrible things,” Miller said. “Democrats don't give a damn about facts. Particularly facts that don't play into their hand. They never have. What they very much give a damn about is lying to low-information rank-and-file Democrat voters who buy everything they sell — without question or hesitation.”

In Reason, Eric Boehm criticized the White House for claiming that “borrowing $16 trillion over the next decade is fiscally responsible.”

“Possibly the craziest detail is the fact that the White House is trying to frame all of that as being an exercise in fiscal restraint. No, really. In a ‘fact sheet’ released alongside the budget, the White House touted how the proposal would cut the deficit by $3 trillion over the next 10 years,” Boehm wrote. “Someone in the White House might want to Google what the phrase ‘paid for’ actually means, because Biden's budget assumes the federal government will keep borrowing at near-record levels for the next decade.”

“So what about that $3 trillion reduction in deficits that the White House is promising? That number is the result of comparing Biden's 10-year budget plan against the current baseline projections for deficits. It doesn't mean the debt will fall, or even stop rising—we'd have to run a surplus for that to happen. It only means that, if enacted, Biden's plan would result in the national debt being $3 trillion lower in a decade than what's currently projected.”


My take.

Reminder: "My take" is a section where I give myself space to share my own personal opinion. If you have feedback, criticism, or compliments, don't unsubscribe. Write in by replying to this email, or leave a comment.

  • Biden’s budget might sound nice, but isn’t feasible and is hard to take seriously.
  • Omissions like not extending the Child Tax Credit past 2025 make me wonder how seriously the administration takes it, too.
  • Biden missed a chance to capitalize on a strong economy by addressing Social Security and military bloat, instead opting for the status quo of runaway spending.

There are very few surprises here. The biggest problem is really what the budget doesn't say.

For instance, when I think about where I want my tax dollars to go, eliminating child poverty or helping make child care more affordable is a priority I am comfortable with. If the federal government is going to take 30% of my paycheck, I'll sleep easier knowing it might help an impoverished family pay their bills, feed their kids, or even encourage them to have kids in the first place. I also think it’s good politics for Biden to emphasize working family policies.

Given that, I'm partial to the expanded Child Tax Credit, which at first glance I was happy to see back in the bill. But then I realized Biden is only including it for 2025, and does not factor in any plan to cover the cost of extending it beyond that. That’s the kind of red flag on a budget proposal that makes it hard to know if any of the numbers are meaningful.

Similarly, I think there is a strong case that we should be trimming the federal budget — not expanding it. We had an explosion of government spending after the pandemic, and I think there was good reason to justify it at the time; but we are no longer living in that world. If Biden wants to emphasize the strength of the economy, he should be making the case to use that strength to trim spending back to pre-Covid levels. At the very least, he should have a plan for shoring up Social Security, which is barreling toward insolvency and is one of the primary drivers of our deficit and debt. But the budget proposal pushes federal spending higher, and doesn’t meaningfully address Social Security.

I've made the case that the only way to reduce the federal debt and deficit is to have a plan not only for Social Security and Medicare but also for reducing military spending. I'm pragmatic enough to understand that this is not the year that is going to happen — with conflicts in Ukraine and Israel, and all the tension in the South China Sea, there is very little chance military spending is going to stay flat and basically zero chance it'll be cut.

But again: We are in a strong economic moment, and if Biden is going to run on that economy he should take the opportunity to try to clean up the balance sheets. I'd love to see him pairing language with reforms around Social Security and Medicare to calls for cleaning up the military bloat and waste that is emblematic of the federal government as a whole. Instead, he seems to be holding the status quo on the military and casting any suggestion of entitlement reform as a Republican attack.

To be honest, the politics of this budget make sense to me. Biden wants to run on taxing the wealthy and cutting taxes for the middle class; on making it easier to afford kids or own a home while beefing up the military to keep us safe; and on lowering the price of prescription drugs and forcing corporations to pay their fair share. I’ve got reservations about corporate tax hikes, but I can get on board with making it a little more expensive to earn over $400,000 per year, perhaps because I (like most voters) have never come close to making that kind of money. That's all fine and good, politically. But those things are easy to say — they’re much harder to pull off in the confines of a responsible budget.

I genuinely believe we are in a perilous moment with our debt and deficit, and I don't see anything in this budget that is new, innovative, or helpful in the way we'll need to escape said peril. Even with all of Biden's rosy assumptions about the economy continuing to grow, unemployment rates staying low and inflation continuing to dissipate, we'll still hit budget deficits of $1.6 trillion a year. By the administration’s own projections, debt will be 106% of GDP by 2034 and total $45.1 trillion. That such a plan actually represents a better path forward than the one we are on is not a positive message about this plan, it’s an indictment of where we are. As nice as Biden’s budget sounds in theory, the numbers just aren’t reassuring.

What do you think should be the priorities of the Biden administration’s budget? Let us know!

Disagree? That's okay. My opinion is just one of many. Write in and let us know why, and we'll consider publishing your feedback.


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Your questions, answered.

Q: What is the aftermath of the train derailment in East Palestine, Ohio, in February of 2023?

— Note to self, from March 3, 2023

Tangle: Every once in a while we cover a story that garners a lot of media attention and has a large and localized impact, but then the national news media moves on, and the affected area is still left recovering. When that happens, we like to look back later to report on circumstances after the cameras have all left town. We did this recently when talking about the recovery effort in Maui, and we’re going to do it today to check on the recovery effort in East Palestine, Ohio.

As a reminder: On February 3, 2023, a train operated by Norfolk Southern derailed in East Palestine, Ohio, a town of roughly 4,700 people just 50 miles northwest of Pittsburgh. 38 cars were derailed, 11 of which were carrying hazardous chemicals. This is what we reported in our initial coverage:

In the immediate aftermath of the first fire and the controlled burn, there were some obvious and indisputable environmental issues. The initial spill killed an estimated 3,500 fish, as of Feb. 8. On top of that, the Environmental Protection Agency said ‘materials released during the incident were observed and detected in samples from Sulphur Run, Leslie Run, Bull Creek, North Fork Little Beaver Creek, Little Beaver Creek, and the Ohio River.’ Those waterways serve millions of people downstream. Some towns as far away as West Virginia immediately responded by increasing testing of their water. The Ohio EPA and other state and local organizations have continued to test the water, saying it is safe.

Unlike the wildfire recovery effort in Lahaina, where there were measurably affected land area, visibly burned homes, numbers of missing and quantifiable financial recovery efforts, the situation in East Palestine is much more nebulous. The Environmental Protection Agency (EPA) has started a process to review vinyl chloride, which is already a known carcinogen, for a possible ban — a process that could take years. Both the EPA and Norfolk Southern have conducted tests of drinking water in the area and determined that it is safe for consumption, but many residents still don’t trust the water

Anecdotally, there are reports since the crash of people having their periods stop, developing epilepsy and contracting laryngitis, as well as new incidents of chronic asthma and nosebleeds. Because of the unique combination of chemicals people were exposed to and the relatively short timeframe since the crash, there are no conclusive findings about health exposures yet.

The government response has been to monitor air and water samples, deploy a task force to respond to airborne toxic substance exposure, and attempt to improve rail safety. For a more personal look at how residents of East Palestine are responding, Alejandro de la Garza published this excellent and thorough piece in Time Magazine.

Want to have a question answered in the newsletter? You can reply to this email (it goes straight to my inbox) or fill out this form.


Under the radar.

Democrats' advantage with nonwhite voters is shrinking to its lowest level in decades, new polling data shows. For years, Democrats have been able to rely on black, Latino, and Asian American voters to cast ballots for them. But younger generations don’t have the deep ties to the Civil Rights Movement that many older voters of color do, and the gap in party support has now narrowed. Nearly 20% of black voters now say they lean Republican, while 35% of Hispanic voters say they do. In March, a New York Times poll found that Biden had a 56-44 lead with non-white Americans over Trump, despite winning that group by almost 50 points in 2020. Axios has the story


Numbers.

  • 1921. The year the Budget and Accounting Act was passed, requiring the president to submit an annual, comprehensive budget proposal to Congress. 
  • 60%. The percentage of Americans who said the U.S. government is spending too much in a March 2023 poll from AP/NORC.
  • 34%. The percentage of Americans who said they approve of the way President Biden is handling the federal budget in the same poll. 
  • 65%. The percentage of Americans who said the U.S. is spending too little on education. 
  • 35%. The percentage of Americans who said the U.S. is spending too little on the military. 
  • 6.1%. The GDP deficit projected for 2025 in Biden’s budget, wider than the deficit run by the U.S. in any year between 1962 and 2019.
  • 3.9%. The GDP deficit projected for 2034 in Biden’s budget, higher than it was in any year from 1993 to 2007.

The extras.

Yesterday’s poll: 641 readers took our poll on the proposed TikTok ban with 31% fully supporting the legislation. “Seems that the more prudent solution would be to pass a bill that protected our data and didn't allow apps to mine it,” one respondent said.

What do you think should be the priorities of the Biden administration’s budget? Let us know!


Have a nice day.

An elite ski resort called the Yellowstone Club just became the first ski area in Montana to adopt a unique solution to help preserve its appeal during a dry winter: Turn wastewater into snow. It may seem unsettling at first, but resort officials and local conservation groups say the water reclamation project is both safe and beneficial to the environment. “The benefits of this project are actually an enhancement to the watershed function,” said Pat Byorth, Montana water director for Trout Unlimited, in a press release. “It’s an enhancement to water supply, to water quality in the basin. So everybody from skiers to anglers will benefit from this, and downstream agriculture benefits at a time where water supply is uncertain.” Reasons to be Cheerful has the story.


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Isaac Saul
I'm a politics reporter who grew up in Bucks County, PA — one of the most politically divided counties in America. I'm trying to fix the way we consume political news.