Joe Biden proposes higher taxes, spending and debt in $7.3tn budget

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Joe Biden unveiled a $7.3tn budget plan for 2025 which would push US debt over 100 per cent of gross domestic product, as the president laid out a fiscal agenda that boosts spending but plans to save $3tn through higher taxes over 10 years.

The administration’s fiscal projections were announced in its annual budget proposal on Monday, which is designed to draw a sharp contrast with former president Donald Trump’s economic plans ahead of the presidential election in November.

Trump has vowed to renew the sweeping tax cuts enacted during his term in the White House in 2017, and limit government spending, while Biden is planning to raise taxes on big businesses and the wealthiest households to reduce deficits, offer tax credits to families with children, and help preserve funding for social programmes.

Many of the provisions in Biden’s budget are unlikely to be adopted by Congress, given that Republicans opposed to his policies control the House of Representatives. But the plan signals the president’s priorities if he were to win a second term in office and is able to secure Democratic majorities on Capitol Hill.

Under Biden’s projections, the US debt held by the public would hit 102.2 per cent of GDP in 2025, up from 97.3 per cent at the end of 2023, and rise further to 106 per cent by 2030, before falling back to 105.6 per cent by 2034.

The budget deficit was set to come in at 6.1 per cent of GDP next year, while interest payments servicing the US debt would rise above $1tn per year by 2026.

Republicans, led by House Speaker Mike Johnson, condemned the budget as “a road map to accelerate America’s decline”.

“The price tag of President Biden’s proposed budget is yet another glaring reminder of this administration’s insatiable appetite for reckless spending and the Democrats’ disregard for fiscal responsibility,” the…