LANHAM, Maryland (AP) — President Joe Biden on Wednesday said Republican policies would blow up the national debt by $3 trillion over 10 years, taking direct aim at GOP lawmakers who say their priority is a balancing the federal budget.
“It would explode the deficit and leave the American taxpayer holding the bag,” the president said in a Wednesday speech.
The president said his budget, which is set to be released March 9, would protect Social Security and Medicare from cuts, while reducing the national debt by $2 trillion over a decade. One key driver of Biden’s planned deficit reduction appears to be his willingness to increase taxes on the wealthiest U.S. households.
“I want to reward work, not just wealth,” Biden told union workers gathered in Lanham, Maryland.
The president essentially charged the GOP with hypocrisy for favoring tax policies that could push the accumulated $31.4 trillion national debt higher. But Biden, too, wants to preserve some of the same tax cuts as Republicans so long as the approach is “fiscally responsible.”
The speech was the latest evolution in a political and economic debate that will play out over several months. Biden and House Speaker Kevin McCarthy need to reach a deal by midsummer on raising the government’s legal borrowing authority or else the government could lack the funds to pay its bills and default.
McCarthy, R-Calif., says they should agree on a path toward balancing the budget, posting on Twitter last Friday, “No more blank checks for runaway government spending.”
The president detailed a recent exchange with the GOP speaker in a speech Tuesday in Washington to county government officials. He told them that McCarthy “made it real clear to me what he wants to do. He says he’s not going to raise any taxes at all on anybody. He just wants to cut programs.”
The president said Republican lawmakers should present their budget plan to the public, just as the White House intends to do.
“I believe we could be fiscally responsible without risking — threatening to send our country into chaos,” Biden said Tuesday of debt limit talks.
But the actual path of the national debt could hinge on the upcoming expiration of individual tax cuts that President Donald Trump signed into law in 2017. Extending those tax cuts would in theory raise the national debt, as the nonpartisan Congressional Budget Office based its projections on them lapsing after 2025.
The CBO released an updated budget outlook Wednesday, estimating that total publicly held debt would top $46.4 trillion in 2033. Separately, the CBO said the president and Congress would have some time between July and September to raise the debt limit, at which point the Treasury Department would exhaust its extraordinary measures and default would become a risk.
The White House fact sheet said Republicans would increase the debt by $2.7 trillion by prolonging those tax cuts, in addition to cutting a corporate minimum tax established by Biden and other policies that would add to the debt.
The White House noted that the extension of the Trump-era tax overhaul would give a $175,000 tax cut to families with incomes over $4 million. The size of that tax cut is roughly double the median U.S. household income.
But the same White House fact sheet adds that Biden would like to preserve some of the same tax cuts as Republicans, just not those that benefit the wealthy. Biden pledged during the 2020 campaign to not raise taxes on anyone making under $400,000, so letting the tax cuts expire could be viewed as a tax hike on the middle class.
The Tax Policy Center, a think tank, estimated when the law was passed that 53% of taxpayers would see their IRS bills increase in 2027 after the cuts expire. About 70% of those solidly in the middle class — the middle 40% to 60% of all taxpayers — would owe more.
The fact sheet previewing the speech said the president is committed to a “fiscally responsible approach to continuing current tax policies” for people earning less than $400,000. It’s not entirely clear what that could mean for the national debt, despite Biden repeating Wednesday his promise in last week’s State of the Union address to cut deficits by $2 trillion.
That leaves Republicans and Democrats theoretically in agreement on keeping taxes low for most people, while leaders in both parties have pledged no cuts to Social Security or Medicare.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said that lawmakers should be open minded and consider changes across the board in order to lower deficits.
“Everything should be on the table to get our unsustainable fiscal problems under control,” she said in a statement.