President Joe Biden unveiled a 2024 budget Thursday that raises taxes on high earners and large corporations while providing relief for struggling urban mass transit systems and sending money to states and locals for climate resiliency projects.
The proposal totals $6.9 trillion, up from last year’s $6.4 trillion of federal spending.
Discretionary spending would total $1.7 trillion, including $885 billion for defense and $810 billion for nondefense and veteran’s programs. Biden’s budget isn’t binding on Congress, and House Republicans have pledged to hold spending flat to pre-pandemic levels. They are expected to unveil their own budget in the next few months. But the document unveiled Thursday is still important as an indication of where Democrats want to begin negotiations.
“Show me your budget and I’ll show you what you value,” Biden said in a budget address in Philadelphia. “My budget is going to give working people a chance.”
The budget increases climate-related spending by nearly 26%, to $52.2 billion, according to the White House. That includes $4.5 billion for clean energy workforce and infrastructure projects, $16.5 billion for climate science and research and $23 billion for community climate resilience against floods, wildfires and storms.
The budget shows “the contours of what we’re for, and how it’s in stark contrast with what it appears to be the other team is for,” Biden said, adding he was willing to meet with House Speaker Kevin McCarthy to hammer out a final spending plan.
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The White House said the plan would reduce the federal deficit by $3 trillion over the next 10 years.
McCarthy and top House Republican leaders said in a joint statement the budget shows “the same far left spending policies that have led to record inflation and our current debt crisis.”
It wasn’t immediately clear how much of the transportation and infrastructure-related appropriations were on top of money already provided in the $1.2 trillion Infrastructure Investment and Jobs Act. The White House said it would break down those allocations later Thursday.
The administration aims to generate relief for transit agencies located in urban areas by allowing the agencies to tap federal formula grants that were meant for capital projects to be used for operations. Like with the budget’s appropriations, Congress would need to approve the policy change.
“The transit industry is facing economic uncertainty, so we’ve called for the historic policy change,” said Federal Transit Administration chief Nuria Fernandez Thursday in a press call with reporters outlining the budget’s priorities for transit.
The formula capital grant funds total more than $6.7 billion nationally.
Altogether, Biden’s budget would allocate more than $21 billion to transit, Fernandez said.
The proposal would send $4.5 billion in grant funding to18 large transit projects in 11 states across the nation.
That includes $700 million for the New York-New Jersey Gateway Hudson tunnel project; $350 million for the Chicago Transit Authority’s five-mile Red Line extension; and $500 million for the MTA’s Second Avenue subway Phase 2 project.
The money would not be allocated until the projects have inked construction grant agreement, or full funding agreement, Fernandez said.
On the housing front, the budget includes both mandatory and discretionary housing investments that total more than $175 billion. The administration wants to create a new Neighborhood Homes Tax Credit, the first tax provision to directly support building or renovating affordable homes for homeownership. It would also expand the Low-Income Housing Tax Credit by $28 billion by increasing the allocation of tax credits that states receive, and reduce the private activity bond financing requirement to 25% from 50% in order to “leverage more private capital into LIHTC deals and build more units of affordable housing.” The lowering of the PABs requirement was a provision included in the original Build Back Better bill in 2021.
On the tax front, Biden proposed lifting the top individual tax rate to 39.6% from 37% for those earning more than $400,000 and raising the corporate tax rate to 28% from 21%.
The plan would also the higher standard tax deduction and reduced tax rates enacted under the Tax Cuts and Jobs Act of 2017, but only for households making under $400,000. The provisions are set to expire in 2025 without action.
The budget would double the capital gains rate to 39.6% from 20% for people earning at least $1 million a year and would also limit the amount of money that those earning over $400,000 can keep in a Roth individual retirement account.
For the second year, Biden called for a 25% minimum tax on billionaires, which affects roughly 0.01% of the population, according to the White House.