Biden takes aim at crypto, real estate and oil industries as he unveils his budget

His proposed budget would provide an estimated $24 billion in savings by eliminating a tax subsidy for crypto investors that allows them to sell a cryptocurrency like bitcoin

BTCUSD

at a loss and take a tax loss to reduce the tax burden, but then buy back the same asset the next day, according to the White House.

See: Cryptocurrency investor losses are turned into IRS gains, as there is no wash sale rule

The budget would provide $19 billion in savings by closing a real estate “like-kind” loophole

VNQ

investors, which allows them to defer paying tax on profits from deals indefinitely as long as they continue to invest in real estate.

It would provide $31 billion in savings by eliminating special tax treatment for oil and gas

XOP

corporate investments, as well as other tax preferences for fossil fuels, the White House said.

Many of the president’s budget proposals are not expected to find much traction in the Republican-run House of Representatives, but they could help give the Democratic incumbent talking points in a 2024 re-election campaign.

In addition, Biden’s proposal – discussed in a speech Thursday in the swing state of Pennsylvania – is likely to feature in his discussions with House Republicans on raising the US debt limit.

The president would increase spending on things like the Social Security Administration, which would see a $1.4 billion increase over the 2023 enacted level to fund spending on staff and IT or other improvements. Schools in low-income communities will see a $2.2 billion increase, and the Advanced Research Projects Agency for Health (ARPA-H) will see a $1 billion increase.

The proposed budget has total spending totaling $6.88 trillion, up from an estimated $6.37 trillion in spending for the current fiscal year. That would be $5.04 trillion in revenue, resulting in a deficit of $1.85 trillion.

Biden’s budget takes aim at the pharmaceutical industry

PJP

in part by aiming to build on the Inflation Reduction Act’s move to allow Medicare to negotiate prices for some drugs. It calls for allowing the program to negotiate prices for more drugs and bringing drugs into negotiations more quickly after they are launched.

His budget targets wealthier Americans’ retirement investments as it proposes to cap the amount that those earning more than $400,000 a year can keep in tax-advantaged retirement accounts, in a move that would yield an estimated $23 billion in savings.

That calls for an end to the carry rate loophole, which allows private equity fund managers to pay lower tax rates, even as Biden’s push on the issue flopped last year when Democrats held slim majorities in both houses of Congress.

It contains new attempts by Biden to raise taxes on American companies, as he proposes raising the corporate tax rate to 28% from 21%, raising the tax rate on foreign earnings to 21% from 10.5%, and quadrupling the 1% tax on stocks. repurchase.

Biden vs. McCarthy

Biden and other Democrats have called for House Speaker Kevin McCarthy and his fellow Republicans to lay out their own proposed budget, and the president reiterated that point Thursday when he addressed a union in Philadelphia.

“I am ready to meet the speaker at any time – tomorrow, if he has his budget. Put it down. Tell me what you want to do. I’ll show you what I want to do. We’ll see what we can agree on, and what we can’t agree on, said Biden.

McCarthy reportedly said it could be two months before they have one. The speaker told reporters Wednesday that the GOP would analyze Biden’s proposal and begin work on its own.

McCarthy and his fellow Republicans have demanded spending cuts in exchange for lifting the cap on federal borrowing, while Biden and his fellow Democrats have said it should be raised unconditionally.

Related: CBO warns of potential for US default between July and September, as debt limit gap persists

Congressional Republicans blasted Biden’s budget on Thursday for what they said would be a burden on families through taxes or higher costs, and challenged the president to cut spending ahead of high-stakes talks on the debt ceiling.

“We must cut wasteful government spending,” McCarthy, a California Republican, and three other House GOP leaders said in a statement.

“Our debt is one of the greatest threats to America, and the time to address this crisis is now.”

Other tax proposals

Another part of Biden’s budget is a proposal to strengthen Medicare by raising the Medicare tax rate on earned income and investment income to 5% from 3.8% for people making more than $400,000 a year.

There are also other proposed measures that would increase taxes on the wealthy, such as a billionaire minimum tax.

The budget would cut the deficit by nearly $3 trillion over 10 years, according to the White House.

MarketWatch’s Robert Schroeder contributed to this report.