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U.S. President Joe Biden speaks in the Oval Office of the White House in Washington on March 11, 2021.Andrew Harnik/The Associated Press

U.S. President Joe Biden on Monday submitted a $5.79 trillion budget plan to Congress that calls for record peacetime military spending and further aid for Ukraine, while raising taxes for billionaires and companies and lowering government deficits.

Biden’s budget proposal for the 2023 fiscal year starting Oct. 1, lays out his administration’s priorities, including campaign promises to make the wealthy and companies pay more tax. It is merely a wish list as lawmakers on Capitol Hill make the final decisions on budget matters.

House Speaker Nancy Pelosi said Congress looked forward to working on Biden’s “bold fiscal blueprint.” Republicans and moderate Democrats killed similar tax proposals in the 2022 budget.

The plan was based on economic assumptions from November, well before Russia’s invasion of Ukraine, which has exacerbated previous inflationary pressures on energy and food prices, but Biden’s top economic adviser Cecilia Rouse said the administration still sees the U.S. economy strengthening and inflation easing over the coming year.

“The budget I am releasing today sends a clear message that we value fiscal responsibility, safety and security at home and around the world, and the investments needed to continue our equitable growth and build a better America,” Biden said in a statement.

The Democratic president said he was calling for higher defense spending to strengthen the U.S. military and “forcefully respond to (Russian President Vladimir) Putin’s aggression against Ukraine” with $1 billion in additional U.S. support for Ukraine’s economic, humanitarian, and security needs.

The document offers fresh insight into Biden’s thinking as he attempts to halt the largest war in Europe since World War Two and prepares for a Nov. 8 midterm election that could see his Democratic Party lose control of Congress.

Biden said his administration was on track to reduce the federal deficit by more than $1.3 trillion this year, halving the deficit from the last year of the previous Trump administration, with an additional $1 trillion in deficit reductions planned over the next decade.

“My budget will continue that progress, further reducing the deficit by continuing to support the economic growth that has increased revenues and ensuring that billionaires and large corporations pay their fair share,” he said.

The U.S. federal government, on the hook for rising healthcare and social spending, especially for older Americans, has spent more money than it has taken in for each of the last 20 years.

Billionaires tax

Lindsey Graham, the top Republican on the Senate Budget Committee, said Biden’s tax hikes would harm U.S. workers and the overall economy, while increasing deficits.

Under Biden’s policies, deficits as a share of the economy would fall to 5.8% of gross domestic product (GDP) this year and stay below 5% over the next decade. That compares to 14.9% of GDP in 2020, the last year of the Trump administration, the White House said.

Biden’s plan increases spending on community policing, efforts to fight gun crime, and bigger investments in crime prevention and community violence interventions, as well as some $50 billion in added funding to address the critical shortage of affordable housing.

The plan does not include line items for bolstering climate change, healthcare, education, and manufacturing competitiveness, after disagreements within the Democratic party sank Biden’s “Build Back Better” bill.

Instead, it has a deficit-neutral reserve fund to allow lawmakers to negotiate those items, Shalanda Young, director of the Office of Management and Budget, said.

It introduces a new minimum tax requiring the very wealthy to pay at least 20% of their income in taxes, including on the gains on investments that have not been sold.

That tax would apply to 0.01% of American households - those worth over $100 million - with more than half of the new revenue coming from households worth more than $1 billion, the White House said. It would reduce the government deficit by $360 billion over the next decade.

The budget plan also targets U.S. corporate buybacks, requiring company executives to hold on to company shares that they receive for several years after a stock buyback.

The budget would raise the corporate tax rate to 28% while making changes to the corporate tax code to reward job creation and investment.

It calls for $773 billion for the Department of Defense, plus $40 billion for defense-related programs at the FBI, Department of Energy and other agencies.

Russia’s Feb. 24 invasion of Ukraine has intensified concerns about European security, while the Biden administration continues to invest in research and development of hypersonic missiles and other modern capabilities.

The United States is not directly engaged against Russia in the Ukraine war but is giving Kyiv weapons and extensive assistance. Working with European allies, it also has imposed heavy economic sanctions against Russia.

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