Biden accuses Trump of ‘financial mismanagement’ as he unveils new taxes for richest Americans

Budget contains hike to defence spending that is already riling senators

Joe Biden announced that his budget for fiscal year 2023 would contain a new tax for millionaires and billionaires while accusing his predecessor of running up the federal budget deficit.

Mr Biden delivered remarks at the White House on Monday flanked by his acting budget office director, Shalanda Young, and claimed that his plan for America’s finances would lead to “the largest one-year reduction in the deficit in US history”.

Turning his fire on Donald Trump, he added: “After my ... predecessor’s fiscal mismanagement, we’re reducing the Trump deficits and returning our fiscal house to order.”

Mr Biden’s budget plan aims to reduce the federal budget deficit by $1.3 trillion next year. The president’s plan includes a key policy proposal that is likely to be opposed by Republicans and strongly supported by progressives: a tax on households with $100m or more in assets which would amount to 20 per cent of their total yearly income. There are also additional measures to block US residents from shielding their wealth in tax havens, a popular tactic for evading US tax authorities.

“A firefighter and a teacher pay more than double – double the tax rate that a billionaire pays. That’s not right. That’s not fair. And my budget contains a “Billionaire Minimum Tax” because of that. A 20 per cent minimum tax that applies only to the top 100th of 1 per cent. One-hundredth of 1 per cent of the Americans will pay this tax,” said the president on Monday.

Mr Biden’s plan also hikes the corporate tax rate to 28 per cent, a reversal of a key part of the tax cuts passed under the GOP-led House and Senate in 2017 that were widely blamed for increasing the deficit while benefitting wealthier Americans to a greater degree.

One other element that is likely to rankle Republicans is the plan’s provision to raise the US military budget by 4 per cent; the considerable hike has already been denounced by Senate Minority Leader Mitch McConnell as insufficient due to spiking inflation. At the same time, it has been criticised by Sen Bernie Sanders and other progressives as wholly unnecessary.

The president’s plan also seeks to neuter GOP criticism on another key issue: defunding the police, which Mr Biden’s budget clearly rejects as an idea. The plan would include more than $38bn for local law enforcement agencies meant for the hiring of new officers and support of community policing programs, which the centre-left Biden administration has pointed to as a response to police misconduct and an alternative to calls from progressives to dramatically shift funding away from law enforcement agencies to mental health and other community support organisations.

In his address at the White House the president refuted those arguments while also battling GOP efforts to paint his administration and Democrat-led municipalities around the countries as “soft on crime”.

“I’ve said it before: the answer is not to defund our police departments, it’s to fund our police and give them all the tools they need, training, and foundation, and partners and protectors that our communities need,” he said.

“It funds crime prevention and community violence intervention, drug treatment, mental health, criminal justice reform, and reentry for people coming home after incarceration. All demonstrable ways to reduce crime – and proven ways,” the president added.

Mr Biden’s budget director briefly took questions from reporters at a news briefing Monday afternoon but the president’s usual press team is expected to face more questions from journalists about the newly released budget in the days ahead as they recover from a Covid-19 outbreak that has sidelined the White House’s two top press secretaries.

The president’s budget is not final; Congress will write its own budget proposal based on the White House’s recommendations and will submit their proposal to the president after it passes both chambers. The 50-50 divide in the Senate will likely lead to delays in that process and the budget will not be signed until much later in 2022.