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How WILL Biden cover the cost of his $6 trillion spending spree? Tax rises announced by the President last night will only raise $2.3 trillion - and the national debt is already at its highest EVER

 Joe Biden last night brought the total new spending commitments announced in his first 100 days in office to $6 trillion - but he's facing questions over whether tax rises he proposes will be enough to cover the ambitious plans he needs to put through Congress. 

Speaking to 200 lawmakers in Congress last night, Biden set out plans for his $2.3 trillion 'American Jobs Plan' that he called 'a blue-collar blueprint to build America'. It joins the American Rescue Plan and the American Families Plan, at a time when national debt is at its highest level since 1945.

The $1.9trillion American Rescue Plan that gave aid to American citizens amidst the coronavirus pandemic has passed Congress and is already covered through federal spending.


The $2.3 trillion American Jobs Plan and the $1.8 trillion American Families Plan he has proposed will cost a total of $4.1 trillion, still needs Congressional approval and Republicans have demanded negotiation to lower the costs.

In order to pay for those two plans, the president announced a series of tax initiatives including almost doubling capital gains to 39.6 percent and hiking the rate for the top one 1 percent of income earners to 38.6 percent.

He would also push corporate tax rates from 21 percent to 28 percent, impose a global minimum tax on corporations and will give the IRS $80billion to chase town tax evaders - which he says will generate $700billion in net revenue over 10 years.

According to experts at The Tax Foundation, Biden's tax increases announced in Congress on Wednesday would raise an estimated $2.37 trillion.

Their analysis of Biden's taxation plans in full project that his planned taxes will raise a total of $3.3 billion - however this is subject to many factors including the performance of the economy. 

Biden also intends to crack down on multinationals, forcing US firms that make money overseas and companies who use offshore businesses to pay significantly more in taxes under his 'Made in America' tax plan.  

The looming gap between Biden's spending ambitions and the projected tax revenues raises the prospect that the President could resort to further borrowing to cover his spending. 

Republicans widely panned the speech on Wednesday as 'boring' and a list of 'socialist dreams'. 

In the GOP's rebuttal to Biden's speech, Senator Tim Scott belittled the new president's initial priorities - aimed at combating the deadly virus and spurring the economy - as wasteful expansions of big government.

'We should be expanding options and opportunities for all families,' Scott said. 'Our best future won't come from Washington schemes or socialist dreams.' 

The national debt currently stands at around $28 trillion, 100 percent of GDP and the highest it has been since 1945; and on track to reach 107 percent by 2031, not factoring in Biden's proposed 10-year spending.

Under Biden's predecessor Donald Trump, America's national debt rose by $7.8 trillion, and was rising even before the coronavirus pandemic forced the need for economic injection.

But unlike Biden, Trump was often more reluctant to pass spending bills, and in contrast to Biden's tax proposals, the former president introduced sweeping tax cuts under the Tax Cuts and Jobs Act of 2017.

President Joe Biden launched sweeping tax hikes on Wednesday night as part of his administration's proposal to raise $6 trillion for his three plans; The American Rescue Plan, The American Jobs Plan and The American Families Plan. Pictured: Biden address the joint session at the US Capitol in Washington DC on Wednesday night

President Joe Biden launched sweeping tax hikes on Wednesday night as part of his administration's proposal to raise $6 trillion for his three plans; The American Rescue Plan, The American Jobs Plan and The American Families Plan. Pictured: Biden address the joint session at the US Capitol in Washington DC on Wednesday night

The American Jobs Plan: $2.3 trillion 

The 'Made in America' tax plan falls under the The American Jobs Plan, that if passed will see $2.3 trillion spent on improving America's ageing infrastructures, including its roads, bridges, rail lines and utilities, as well as huge spending on R&D.

The plan includes a raise in corporation tax - from 21 percent to 28 percent - and a substantial increase in tax on the activities of U.S. multinational corporations, both locally and abroad.

Ahead of Biden's address on Wednesday, the New York Times reported that the spending plan is so large, that 15 years of higher corporate taxes will be required to cover around eight years of spending. 

Part of that spending will include a huge $621bn for transportation projects as well as funds going towards improving drinking water, infrastructure, expanding broadband, maintaining electrical grids and elderly care.

The Tax Foundation estimates that if passed at 28 percent, the new corporate tax rate could raise around $886.3 billion between 2022 and 2031, before factoring in potential reduced economic output.

The foundation also estimates that Biden's proposed 15 percent minimum book tax would raise about $202.7 billion in additional revenue from 2021 to 2030.

Furthermore, it predicts that the proposed increase on U.S. multinational's tax liabilities would see them pay an additional $104 billion in 2022, and $1.2 trillion over 10 years, and would increase the tax burden on the foreign operations of multinationals by more than $714 billion over the next decade. 

However, in its conclusion of its assessment of Biden's proposed corporation tax increase, The Tax Foundation said: 'Raising the U.S. corporate income tax rate would erode America's international tax competitiveness, giving us the highest combined corporate tax rate in the OECD. 

'Such a relatively high corporate tax rate would encourage profit shifting abroad and otherwise out of the U.S. corporate sector.' 

Addressing Congress and those watching, Biden told his audience: 'I know some of you at home are wondering whether these jobs are for you. You feel left behind and forgotten in an economy that´s rapidly changing. Let me speak directly to you. 

'Independent experts estimate the American Jobs Plan will add millions of jobs and trillions of dollars in economic growth for years to come. These are good-paying jobs that can't be outsourced. Nearly 90% of the infrastructure jobs created in the American Jobs Plan do not require a college degree. 75% do not require an associate´s degree.

'The American Jobs Plan is a blue-collar blueprint to build America. And, it recognizes something I've always said. Wall Street didn´t build this country. The middle class built this country. And unions build the middle class.'


The American Rescue Plan, worth $1.9 trillion, has already passed the senate in a 50-49 party-lines vote held in March. The American Jobs Plan worth around $2.3 trillion and the The American Families Plan worth $1.8 trillion take the combined total of Biden's three plans to $6 trillion, that will be spent over roughly 10 years. Pictured: President Biden addresses Congress

The American Rescue Plan, worth $1.9 trillion, has already passed the senate in a 50-49 party-lines vote held in March. The American Jobs Plan worth around $2.3 trillion and the The American Families Plan worth $1.8 trillion take the combined total of Biden's three plans to $6 trillion, that will be spent over roughly 10 years. Pictured: President Biden addresses Congress

The American Families Plan: $1.8 trillion

Having beat back progressive primary challengers and pushed major government interventions in the economy through taxes and spending, Biden put a focus on the wealthy and demanded measures to bring more economic equality in his speech.

Funds for the $1.8 trillion American Families Plan - in which Biden has proposed $1 trillion worth of new spending and $800 billion in tax credits - will also be raised through taxation.

However, The Committee for a Responsible Federal Budget predicts the tax increases under the American Families Plan will see $1.5 billion raised in total through tax hikes, leaving a $300 billion deficit after the $1.8 billion spending over 10 years.

Under the plan, the IRS' funding would be increased, and marginal income tax for top 1 percent and capital gains and dividend tax rates for those earning over $1 million per year would also be raised.

The plan would see $506 billion spent on education, including free, universal pre-kindergarten for all three- and four-year-olds, as well as two free years of community college tuition for all Americans.

A further $495 billion would e spent on families and children, including subsidized child-care, paid family medical leave program, and $855 billion on expanded tax credit extensions, including the extending the child Tax Credit expansions from the American Rescue Plan through 2025 and permanently make the Child Tax Credit fully refundable. 

In order to raise the funding, the proposal would see $80 billion in enhancements to the Internal Revenue Service (IRS) which could raise $700 billion from tax evaders, according to estimates made by the White House.

It would also raise marginal income tax for top 1 percent of earners, or those earning over around $400,000, to 38.6 percent – from the current rate of 37 percent.

'That's where it was when George W. Bush became president,' Biden said referring to the current rate, after bashing the 'big tax cut of 2017' enacted under Trump. 'It was supposed to pay for itself and generate vast economic growth. Instead it added $2 trillion to the deficit,' he said.

'We're going to get rid of the loopholes that allow Americans who make more than $1 million a year pay a lower rate on their capital gains than working Americans pay on their work,' Biden said. 

'This will only affect three tenths of 1% of all Americans. And the IRS will crack down on millionaires and billionaires who cheat on their taxes,' he added.    

Biden unveiled on Wednesday a massive capital gains increase. California, New York, New Jersey, Minnesota and Oregon would have the highest top capital gains rates

Biden unveiled on Wednesday a massive capital gains increase. California, New York, New Jersey, Minnesota and Oregon would have the highest top capital gains rates


Capital gains and dividend tax rates for those earning over $1 million per year would also be increased from the current 23.8 percent to 39.6 percent, with an effective rate of 43.4 percent when the Medicare surcharge is added.

For those earning more than $1 million in high-tax states, the total rate will be even higher given the combined federal and state tax capital gains. In New York it could be as high as 52.22 percent and for Californians it could be 56.7 percent.

Biden has still vowed that no one earning under $400,000 a year will pay more taxes under his administration.  

Analysis of Biden's tax plans during his 2020 campaign from The Tax Foundation suggested his plans would raise $3.3 trillion over the next decade.

The remaining funding will have to come from sources that are yet to be announced, through cutting spending elsewhere, or added to the national debt.

Republicans slam Biden's speech as a 'boring, socialist dream' 

Republicans widely panned the speech on Wednesday as 'boring' and a list of 'socialist dreams'. 

GOP Senator Tim Scott said in his party's rebuttal that the president was 'pulling the country apart' instead of promoting unity, that his remarks were 'full of empty platitudes', and belittled the new president's initial priorities - aimed at combating the deadly virus and spurring the economy - as wasteful expansions of big government.

'We should be expanding options and opportunities for all families,' said Scott, who preached a message of optimism while remaining a loyal supporter of former President Donald Trump, 'not throwing money at certain issues because Democrats think they know best.'

Citing the partisan battle over Biden's $1.9 trillion COVID-19 relief bill, which Congress approved over unanimous GOP opposition, Scott said: 'We need policies and progress that bring us closer together. But three months in, the actions of the president and his party are pulling us further apart.' 

South Carolina Republican Sen. Tim Scott delivered his party's response to President Joe Biden's first address before Congress

South Carolina Republican Sen. Tim Scott delivered his party's response to President Joe Biden's first address before Congress

Biden's address came three months into a presidency that's seen Republicans repeatedly accuse him of abandoning his campaign pledge to seek bipartisan compromises. While Biden cited a rosy roster of accomplishments and goals in his own speech - 'America is on the move again,' he said - Scott said it was Republicans who had bolstered the economy and began to tame the pandemic.

'This should be a joyful springtime for our nation,' said Scott, citing the Trump administration's role in helping spur vaccine development and beginning a revival of the staggered economy. 'This administration inherited a tide that had already turned. The coronavirus is on the run!'

The address also came as Scott, a 10-year veteran of Congress who usually keeps a low profile, has found a spotlight leading his party in a bipartisan effort to overhaul police procedures. That drive was prompted by last May's slaying of George Floyd, a Black man, and energized anew by this month's conviction of a white former Minneapolis police officer for the killing.

'I'm still working. I'm still hopeful,' he said of the talks.

Scott criticized many school systems' decisions to halt or limit in-person classes during the pandemic as a safety measure. Those closures, which were recommended by public health officials, have drawn fire from Republicans as an overreaction and become part of the GOP's culture war with Democrats.

'Locking vulnerable kids out of the classroom is locking adults out of their future,' Scott said.

Scott cited low unemployment rates for minorities before the pandemic struck last year, calling it 'the most inclusive economy in my lifetime.' And he praised GOP efforts including tax breaks to encourage business investments in low-income communities.

'Our best future won't come from Washington schemes or socialist dreams,' he said, echoing the GOP's oft-repeated theme that Democrats are pushing far-left plans. 'It will come from you - the American people.'

Scott has long embraced themes of opportunity and a cheerful optimism that were conservative calling cards during the Reagan era. He retold the story of a grandfather who left grade school to pick cotton and led a lifetime of illiteracy, his own childhood living in a single bedroom with his single mother and brother and nearly failing out of high school.

Scott said his family went 'from cotton to Congress in one lifetime. So I am more than hopeful - I am confident - that our finest hour is yet to come.'

Those messages could make Scott a positive messenger for the GOP in what could otherwise be a divisive 2022 election campaign, when the party has high hopes of winning control of the House and perhaps the Senate. Scott is strongly favored to be reelected next year.

Over the years, Scott at times called out Trump in measured tones over some of his racially offensive broadsides. Yet he's remained a strong supporter of the former president and opposed Trump's removal from office after the House impeached him for inciting the Jan. 6 attack on the Capitol. 

1 comment:

  1. Just pretend its military spending and aid for Israel and they will fall all over themselves to vote "yes"!

    ReplyDelete