Biden’s $6 Trillion Budget Aims for Path to Middle Class, Financed by the Rich

WASHINGTON — President Biden’s $6 trillion budget bets on the power of government to propel workers, families and businesses to new heights of prosperity in a rapidly changing economy, by redistributing income and wealth from high earners and corporations to grow the middle class.

The inaugural budget request of Mr. Biden’s presidency reduces spending levels compared to last year, when lawmakers pumped trillions of dollars to people, businesses and local governments to help them survive the pandemic recession. But it sets the nation on a new and higher spending path, with total federal outlays rising to $8.2 trillion by 2031 and deficits running above $1.3 trillion throughout the next decade.

That spending represents an attempt to expand the size and scope of federal engagement in Americans’ daily lives, including guaranteeing four more years of public education, reducing the costs of child care, granting paid leave for workers, sending monthly government payments to parents and paving the way for electric cars and trucks to take over the nation’s highways and cul-de-sacs.

Mr. Biden would borrow trillions over the next decade to fund those programs, swelling the national debt to a record size as a share of the economy, in hopes of putting the country on more solid fiscal footing for decades to come.

“The budget is built around a fundamental understanding of how our economy works and why, for too long and for too many, it has not,” Mr. Biden wrote in an introductory message. “It is a budget that reflects the fact that trickle-down economics has never worked, and that the best way to grow our economy is not from the top down, but from the bottom up and the middle out. Our prosperity comes from the people who get up every day, work hard, raise their family, pay their taxes, serve their nation and volunteer in their communities.”

To invest in those people, Mr. Biden would impose higher taxes on the wealthy and, in particular, large corporations, a move Republicans warn would cripple American companies’ ability to compete globally.

The administration says that raising those taxes would help rebalance the economy to the benefit of businesses and their employees alike. Biden officials say workers would be more productive, earning and spending more money, and that government investments in infrastructure improvement and research and development would better position American companies in a global competition with China and others to dominate emerging high-tech industries like advanced battery production.

The budget projects a doubling of the amount of tax revenue collected from corporations by 2025, compared with 2020, the year before Mr. Biden took office.

The corporate tax increases alone would raise $2 trillion over a decade, with nearly half of that revenue coming from higher taxes on money that multinational companies earn outside the United States. Tax increases on high earners — those making above $400,000 per year — would raise another $750 billion over the decade. That includes raising the top marginal income tax rate to 39.6 percent from 37 percent and a near-doubling of capital gains tax rates for people earning more than $1 million a year.

Mr. Biden has pledged not to raise taxes on people earning less than $400,000 a year. The budget, though, assumes that tax cuts passed by Republicans in 2017 would expire as scheduled at the end of 2025, which would raise taxes on most Americans. On Friday, Biden administration officials said the president would work with Congress before 2025 to ensure people earning less than $400,000 would not face a tax increase.

The budget is both a collection of Mr. Biden’s ambitious economic proposals from his first months in the White House and, on multiple fronts, a repudiation of his predecessor, Donald J. Trump. Where Mr. Trump’s budgets pushed tax cuts, future spending reductions and unfulfilled promises of sustained, accelerated economic growth, Mr. Biden’s promises the dawn of an era of federal taxation and spending previously unseen in the United States outside of times of war or pandemic.

Where Mr. Trump sought to slash more than $1 trillion in federal spending on Medicaid and Obamacare, and rein in spending on Medicare, Mr. Biden’s budget proposes an additional half-trillion in spending for home health workers and federal subsidies for low- and middle-income Americans to buy health insurance.

And while Mr. Trump sought to pull back from government action on climate change, Mr. Biden proposes about $1 trillion on climate-related initiatives, including infrastructure improvements meant to power the nation’s transition to an economy powered less by fossil fuels and more by lower-emission energy sources.

Mr. Biden also seeks to expand the government safety net in an effort to help Americans — particularly women of all races and men of color — work and earn more, rather than relying on corporate America to funnel higher wages to workers.

The budget reflected investments in the middle class “and the pathways to the middle class,” the acting director of the White House budget office, Shalanda Young, told reporters.

Congress will decide how much, if any, of Mr. Biden’s proposals to write into law. The president has a narrow window of opportunity to push them through. Democrats control the House and the Senate by slim margins. Republicans have balked at Mr. Biden’s plans to raise taxes on high earners and corporations and at much of his spending agenda, though some Senate Republicans are negotiating with the president over a potential deal to invest in physical infrastructure, like roads and bridges.

Convincing Republicans to support the level of tax increases that Mr. Biden envisions is incredibly unlikely and the White House’s push is not likely to be helped by the modest economic benefits his budget estimates from his policies.

Mr. Biden’s aides anticipate the economy will grow by 5.2 percent this year, slowing to less than 2 percent growth by the end of the decade. But they stressed on Friday that those forecasts, which were finalized in February, did not account for all of the plans Mr. Biden has since proposed. They said they expect even stronger effects on growth from the policies Mr. Biden has set forth in the budget.

“When we did the forecast in early February,” said Cecilia Rouse, who chairs the White House Council of Economic Advisers, “the world looked much different than it does today.”

While Mr. Biden attempts to court Republicans, Democratic leaders are simultaneously preparing for a possible attempt to push much of Mr. Biden’s agenda through Congress via the budget reconciliation process, which bypasses a Senate filibuster and thus does not require Republican support.

Margot Sanger-Katz, Lisa Friedman, Brad Plumer and Christopher Flavelle contributed reporting.