Skip to main content
off the charts

Analyzing President Biden’s 2025 Budget


That’s all the analysis of the President’s 2025 budget that we’ll be posting here. Watch our other spaces for our expert analysis on the federal budget and other issues.

President’s Budget Prioritizes Key Investments Within Appropriations Cap

President Biden’s budget, released before 2024 appropriations have been finalized, proposes annual appropriations for 2025 to fit within the tight caps set as part of last year’s debt ceiling agreement. Whether the 2025 non-defense appropriations cap, just 1 percent above the 2024 level (without accounting for inflation), is ultimately workable will no doubt be part of the 2025 appropriations debate once the dust settles on the 2024 process.

When making 2025 appropriations, policymakers will need to make careful choices, giving attention to investments that improve well-being and opportunity for people and communities in need or that address other pressing national priorities.

The President’s budget includes some of those investments. To give a few examples, it expands assistance to help families with low and moderate incomes meet the high cost of child care, provides sufficient funding for the WIC nutrition assistance program to serve all eligible families who apply, increases the budget of the Indian Health Service to carry out federal obligations to tribal nations, and provides more adequate customer service funding for the Social Security Administration.

But because of the caps, the budget’s funding increases are generally quite small, in some cases providing less than what’s needed just to keep up with inflation. For example, the two largest federal programs assisting K-12 education (“Title I” Education for the Disadvantaged and IDEA grants for special education) each receive increases of roughly 1 percent over the two years from 2023 through 2025.

The budget also includes cuts in areas that are otherwise a priority for the Administration. For example, while it makes important investments in housing supply and affordability using mandatory funds (not funds subject to the annual appropriations process), the HUD budget includes some notable cuts that will undermine communities’ ability to address affordable housing needs. While it calls for increased funding for Housing Choice Vouchers, the largest rental assistance program, that funding will likely be too little to avert cuts in the number of households receiving assistance.

Crafting workable funding bills under these caps for 2025 will be extremely challenging. Even under the best of circumstances, many needs will go unmet — a reason for Congress to reevaluate these funding levels for next year.

Tagged Federal budget

Biden Budget Would Protect Medicare, Reduce Drug Costs

The President’s 2025 budget contains proposals to permanently close the projected financial shortfall in Medicare’s Hospital Insurance (HI) trust fund and remove the threat of across-the-board benefit cuts.

  • For households with over $400,000 in income, the budget would close a loophole that allows some business income to escape both the HI payroll tax and the net investment income tax (NIIT).
  • It would raise the HI payroll tax, HI self-employment tax, and NIIT rates from 3.8 percent to 5.0 percent on incomes over $400,000.
  • It would devote the proceeds of the NIIT to the HI trust fund.
  • It would achieve additional reductions in Medicare prescription drug prices and credit the savings to the HI trust fund.

The budget’s prescription drug proposals would reduce the cost of prescription drugs for both Medicare beneficiaries and those with commercial health insurance.

  • The budget would strengthen provisions in the Inflation Reduction Act (IRA) that permit Medicare to negotiate drug prices. It would allow Medicare to negotiate prices sooner and for more drugs — saving the program $200 billion over ten years.
  • It would limit cost sharing in Medicare’s prescription drug program for certain generic drugs to $2 per month.
  • It would extend to private health insurance the IRA’s drug inflation rebates, $35 cost sharing for insulin, and $2,000 annual limit on out-of-pocket drug costs.

Another proposal in the budget would extend the Budget Control Act’s 2 percent Medicare sequestration for two more years (through 2034), saving an additional $69 billion. This provision limits provider payments without affecting the benefits received by Medicare participants.

Other Medicare budget proposals would broaden mental health coverage, increase oversight of nursing homes, enhance benefits, and improve program quality. These proposals would have a small budgetary impact.

Tagged Health

Impact of Tight Budget Caps Evident in HUD Budget

The President’s 2025 budget includes low funding for several affordable housing programs that will limit communities’ capacity to maintain rental assistance, provide homelessness services, or increase affordable housing options.

The Administration finalized its budget before final 2024 funding levels for the Department of Housing and Urban Development (HUD) were enacted last week, and the amounts for several programs in the President’s proposals are below 2024 levels or maintain cuts made in final 2024 appropriations legislation. These low funding levels are an example of the tough, harmful choices forced by the low spending caps set in the 2023 debt ceiling agreement.

For example, the budget request includes $8.5 billion — $271 million below 2024 enacted levels — to operate, maintain, and improve public housing for more than 1.6 million residents. This will result in further deterioration of public housing and the potential loss of units. For Native American Housing Programs, the budget cuts the program by $291 million compared to the 2024 level, despite large unmet housing needs in tribal communities. And the budget reduces the formula Community Development Block Grant program by $400 million below the 2024 level — one of the largest cuts in the HUD budget — which would reduce funding to improve housing and community resources.

Because the final 2024 bill included cuts, the President’s requests for some other programs are not below 2024 levels but are lower than funding levels in 2023. This includes the HOME Investment Partnerships Program — which helps fund affordable housing for people with low incomes, Section 202 Housing for the Elderly, Section 811 Housing for Persons with Disabilities, and the Choice Neighborhoods Initiative (which helps revitalize public and affordable housing and the surrounding neighborhoods).

The budget also includes some additional funding for several HUD programs, such as Homelessness Assistance Grants, Project-Based Rental Assistance, and Housing Choice Vouchers, but Congress will likely need to provide more funding to keep pace with rising costs and to prevent a reduction in assistance that people urgently need to afford stable housing.

Tagged Housing

President’s Budget Seeks Modest Increases for Housing Choice Vouchers, but More Likely Needed to Keep Up With Rent Increases and Prevent Cuts

President Biden’s budget requests $32.8 billion for the Housing Choice Voucher program, which currently helps 2.3 million households afford safe, stable housing and is a proven tool to reduce homelessness. The budget indicates that this funding is intended to renew existing vouchers, give an additional 20,000 households access to new vouchers, and provide housing agencies with administrative resources.

But the funding proposed in the budget will likely be insufficient to keep up with rent-related inflation on existing vouchers, let alone fund 20,000 more. That’s partially because the Administration finalized its 2025 budget before fiscal year 2024 funding levels were enacted with different rent inflation levels.

The President’s budget proposes using some of the funding housing agencies have in reserve, but even if Congress gave the Department of Housing and Urban Development (HUD) authority to access those resources, Congress would still likely need to provide additional resources to renew all of the existing vouchers. We urge HUD to share updated estimates of the amount needed to fund existing vouchers in 2025 with Congress to ensure that policymakers can provide the correct amount.

Additionally, the budget requests new authority for HUD to reallocate unused vouchers and voucher funds from housing agencies that aren’t using them to other agencies that are fully using their resources, which could let agencies help more families.

The President’s budget also includes two proposals that could help households with vouchers more successfully secure housing. First, it requests increased funding for administrative resources for voucher agencies to help them effectively operate the program, including providing services, landlord incentives, and covering fees. Second, the budget proposes a pilot that would let agencies use voucher subsidy funding to cover security and utility deposits and holding fees, which can help minimize potential income loss for landlords.

More needs to be done to expand and improve the program in the coming years, given that just 1 in 4 households who qualify for rental assistance receives it (see chart). To that end, the budget includes a first step by requesting an additional $22 billion in mandatory funding to expand vouchers further.

Tagged Housing

More Eligible Families Could Benefit From WIC’s Positive Impacts on Nutrition and Health Under Proposed Funding Level

The President’s budget proposes $7.697 billion for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) for fiscal year 2025. Following higher food costs and a welcome increase in participation, Congress provided $7.03 billion to fully fund WIC in the fiscal year 2024 funding agreement signed into law last week, substantially more than the 2023 enacted level. The budget’s proposed increase in fiscal year 2025 funding would support a continued modest rise in caseloads and allow WIC participants to continue to receive the full, evidence-based food benefit.

The President’s budget also requests new authority to make emergency funding available if quarterly participation and food costs exceed certain projections. That would stabilize program operations when program costs are higher than expected, as happened during fiscal years 2023 and 2024.

Over the course of 2024, policymakers will have access to additional data on participation and cost trends. As the appropriations process unfolds, it will be important for Congress to maintain the long-standing bipartisan commitment to provide enough WIC funding to serve all eligible applicants and ultimately to set the fiscal year 2025 funding level based on the latest data.

The funding provided for the remainder of this fiscal year and the proposed 2025 funding level present an opportunity to reinvigorate efforts to modernize WIC and make it easier for eligible families to enroll in the program and use their benefits. WIC participation is linked to numerous benefits for health and development, including healthier births, lower rates of infant mortality, more nutritious diets, and stronger connections to preventive health care.

But WIC has had lower take-up among eligible individuals than other nutrition programs, with only about half of those eligible participating in 2021 (the most recent year for which estimates are available). The recent uptick in participation is an encouraging sign that federal investments in outreach, modernization, and innovation are bearing fruit. With adequate funding to support growing caseloads, state WIC agencies should take steps to enroll more eligible families. Making it easier for eligible families to get benefits and stay connected to WIC will prevent infants, young children, and new and expecting parents from missing out on these critical benefits.

Tagged Food assistance

President Biden’s Budget Calls for Equity for U.S. Territories

Este contenido está disponible en español.

President Biden’s budget explicitly calls for equity for all five U.S. territories — Puerto Rico, Guam, American Samoa, U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands — in three critical economic and health security programs: Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and Supplemental Security Income (SSI).

The U.S. territories have among the highest poverty rates in the country and have long grappled with severe economic decline and outmigration, due in no small part to discriminatory federal government policies. More recently, residents of the territories have also faced devastating natural disasters that have further aggravated their condition.

Despite their great need, territories receive limited funding to operate programs like Medicaid, resulting in markedly inferior coverage when compared to states. Similarly, some territories receive fixed Nutrition Assistance Program block grants instead of SNAP, as well as block grants to finance the Aid to the Aged, Blind, and Disabled program, an inferior version of SSI. Because funding is fixed, funding constraints — not need — shape these programs’ benefits and eligibility, resulting in far lower benefits than people in the 50 states and the District of Columbia receive.

Providing the territories with equitable access to these programs would greatly aid in their recoveries and mark a big step in mending inequities created by policies that have historically excluded them from the nation’s economic and health security programs.

Tagged Federal budgetTerritories

President Calls for Reform of Unemployment Insurance System

Reflecting on both the response to the pandemic and the current state of our unemployment insurance (UI) system, President Biden’s 2025 budget includes a set of principles for reforming UI. His proposals include: (1) providing adequate benefits in every state; (2) ensuring the system is easily scalable for economic downturns; and (3) establishing a federal floor on states’ eligibility rules.

Congress should start working toward these worthy goals, not only to fix the roof while the sun is shining in terms of preparing the UI system for the next recession, but also to ensure a responsive program for workers losing employment at any time. Less than 30 percent of unemployed workers received UI benefits in the last quarter of 2023. Some were ineligible because their state UI program penalizes workers with shorter work histories, lower wages, and/or part-time work, or completely excludes workers classified as independent contractors.

For those who were covered, UI benefit levels were often low. Average weekly UI benefits were below the poverty level for a family of three in over three-quarters of the states last year. These barriers have been particularly harmful to Black workers, who disproportionately live in states with the least access to UI and with the lowest benefit levels.

There are also administrative reforms worth considering to improve both UI access and integrity. But comprehensive reform, with basic federal requirements for coverage and benefits, is needed to ensure an effective, fair, and responsive UI system in the future.

Tagged Unemployment Insurance

Biden Budget Would Eliminate Tax-Free Treatment for Much of Wealthiest Households’ Annual Income

President Biden’s 2025 budget proposes a 25 percent minimum tax on total income, including unrealized capital gains, for the 0.01 percent of households with at least $100 million in assets. It also scales back other tax breaks for wealthy households. This includes taxing capital gains and dividends at the same rates as wage income for households with more than $1 million in income and closing loopholes for pass-through business owners, private equity, and real estate.

For most households, our progressive income tax system works as intended: higher-income households generally pay a larger share of their incomes in taxes than lower-income ones. However, this relationship breaks down for households at the very top of the income distribution, in large part because wealthy households’ primary source of income — income from unrealized capital gains — is not taxed on annual tax returns.

Capital gains are only taxed when the underlying assets on which the gains are based are sold. Often, wealthy people never sell these assets, instead choosing to pass them — and their untaxed appreciated value — down to their heirs, who will never pay income tax on those gains, contributing to and perpetuating a cycle of income and wealth inequality across generations. Here’s how it works:

The Treasury Department estimates that President Biden’s proposed minimum tax on total income would raise $500 billion over ten years — generated from a small subset of the wealthiest households in the country who often enjoy extremely low average tax rates.

President Biden’s proposal would also help reduce racial disparities. Households of color are overrepresented at the lower end of the income and wealth distributions while white households are overrepresented at the top. The budget’s combination of revenue increases and high-value investments will support economic growth, broaden prosperity, and promote equity by investing in people and communities whose futures have been systematically shortchanged by racism, other forms of discrimination, and deep under-investment.

Tagged Federal tax

Biden Budget Expands EITC for Low-Paid Workers Without Children

The President’s budget corrects design flaws in the Earned Income Tax Credit (EITC) by permanently expanding the credit for low-paid workers without children and making younger and older workers eligible, reinstating successful American Rescue Plan policies.

The EITC has long provided a powerful wage boost to families with low incomes. But adults who are paid low wages and are not raising children in their homes get a paltry credit, which was enacted in 1993 and has not been expanded since. Moreover, those aged 19 to 24 and 65 and older are entirely ineligible for the EITC.

This temporarily changed with the Rescue Plan’s enactment in 2021, which raised the maximum EITC for workers without children from roughly $540 to roughly $1,500. It also raised the income limit to qualify from about $16,000 to more than $21,000 for unmarried filers and from about $22,000 to more than $27,000 for married couples. (See chart.) More than 40 percent of the people aged 19 to 24 who received increased benefits from the Rescue Plan’s expanded EITC were people of color.

Congress let this expansion expire at the end of 2021. In 2023, the maximum credit for adults between 25 and 64 not raising children was just $600 and they needed to earn less than $17,640 ($24,210 for married couples) to be eligible. With this expiration, more than 5 million adults are taxed into, or deeper into, poverty each year.

The changes in the President’s budget would make the Rescue Plan fixes permanent, allowing more low-income workers to benefit from the EITC.

Tagged Federal tax

Permanent Improvements to ACA Marketplace Tax Credits Would Sustain Critical Affordability Protections

The President’s budget proposes making permanent the enhanced premium tax credits available to Affordable Care Act (ACA) marketplace enrollees since 2021 — a boost that has saved marketplace enrollees an average of $800 per year on their premiums on top of the ACA’s original premium tax credits. The enhanced credits expire at the end of 2025 unless Congress acts. Making them permanent would give enrollees peace of mind and help ensure marketplace coverage remains affordable for anyone who needs it in the future.

The enhanced credits are especially critical for enrollees with the lowest incomes (up to 150 percent of the federal poverty level, which is $22,590 for an individual and $38,730 for a family of three in 2024), who can select a silver-level plan and pay nothing in premiums. The tax credit covers the entire premium, and because it is delivered in advance, the enrollee never has to pay that amount out of their own pocket.

For people with moderate incomes (400 percent of the federal poverty level and higher, or $60,240 for an individual and $103,280 for a family of three in 2024), the enhanced credits eliminated a cliff that used to bar them from any credits, no matter how high the cost of their premiums. Now, the enhanced credit caps the amount this group pays toward premiums at 8.5 percent of income. People who are older or live in parts of the country with higher costs see dramatic savings thanks to this aspect of the enhanced premium tax credits. For example, a typical 60-year-old couple making $80,000 per year saves nearly $1,500 per month in premium costs because of the enhancements.

By significantly reducing premiums, the enhanced premium tax credits have made high-quality health coverage more affordable for the vast majority of marketplace enrollees, and they have contributed to historic gains in marketplace enrollment in recent years.

Tagged Health

President’s Proposal to Close the Medicaid Coverage Gap Would Create Pathway to Affordable Coverage for More Than 1.6 Million People

The President’s budget includes a $200 billion investment to close the Medicaid coverage gap.

This would create a pathway to affordable coverage for the more than 1.6 million people in the remaining non-expansion states who fall into a “coverage gap” and are uninsured. People in the coverage gap have incomes under 100 percent of the poverty level ($24,860 for a family of three), and therefore too low to qualify for financial help with marketplace coverage under current federal rules, but they don’t qualify for Medicaid in their state because either their income is too high or they don’t fall into an existing eligibility category. In non-expansion states, the median income limit for parents to qualify for Medicaid is just 35 percent of the poverty level, equivalent to $9,037 annually for a family of three in 2024, and childless adults do not qualify at all.

Uninsured Adults in the Coverage Gap
StateNumber of Adults
Non-expansion states1,653,000
South Carolina83,000

Note: Totals may not sum due to rounding. Estimates include people aged 19-64, in non-institutional settings. Income eligibility for Medicaid and marketplace coverage is determined by grouping individuals into health insurance units and imputing modified adjusted gross income (MAGI) for each program prior to applying state eligibility rules. Immigration status is imputed and the estimated population without a documented immigration status in the U.S. is not included. Although it is a non-expansion state, Wisconsin does not have a coverage gap because it extends Medicaid eligibility up to the poverty level under a waiver.

Source: CBPP estimates based on the 2022 American Community Survey

Whether states act on their own to close the coverage gap and receive generous financial support for doing so or Congress closes the gap at the federal level, extending coverage to people in the coverage gap will improve access to health care for adults, lower costs for households, and help children thrive.

The policy also is critical for advancing health equity across racial and ethnic lines; about 65 percent of those in the coverage gap are people of color, most of whom live in states with a long history of restricting access to coverage based on racist views of who deserves health care.

Tagged Health

Biden Budget Expands Child Tax Credit

President Biden’s budget for fiscal year 2025 rightly calls for restoring the 2021 American Rescue Plan’s expansion of the Child Tax Credit, which dramatically reduced child poverty, contributing to a record-low child poverty rate of 5.2 percent in 2021. The Rescue Plan’s Child Tax Credit expansion also narrowed racial and ethnic disparities in child poverty rates (see chart).

When that expansion and other pandemic relief expired in 2022, child poverty spiked to 12.4 percent, more than doubling the 2021 rate. If the Rescue Plan expansion had been in place in 2022, 3 million additional children would have been kept out of poverty. These impacts make clear that child poverty is a policy choice, and so policymakers should permanently expand the Child Tax Credit.

Under current law, the Child Tax Credit phases in slowly as earnings rise and provides no help to children whose families have less than $2,500 in earnings. The maximum credit is $2,000 per child under current law, but because of its “upside-down” structure, some 19 million children receive a partial credit or none at all because their families’ earnings are too low.

The 2021 expansion addressed this issue by providing the full credit to families with low incomes regardless of their earnings (sometimes called “full refundability”); that provision had the largest impact on poverty. The 2021 expansion also substantially increased the amount of the credit, provided half of it on a monthly basis, and made 17-year-old children eligible.

Ample research indicates that providing additional income to families with low incomes helps children thrive, improving their health, educational, and long-term economic outcomes.

The Rescue Plan’s Child Tax Credit expansion contributed to a historic reduction in child poverty in 2021, and ultimately this policy should be reinstated. But the Senate can make progress in reducing child poverty right now by passing the House-passed bipartisan tax bill that includes an expansion of the Child Tax Credit for 16 million children in families with low earnings, helping more than 8 in 10 children who currently get a partial credit or none at all because their families’ earnings are too low. The bill will provide crucial income support to families with low incomes and lift 500,000 or more children above the poverty line when the expansion is fully in effect.

Tagged Federal tax

Biden Budget Extends IRS Mandatory Funding, Raises Revenue From Wealthy Tax Cheats

The Biden budget proposes to restore and extend the mandatory IRS funding enacted in the Inflation Reduction Act (IRA), which improves tax compliance and increases tax collections primarily from high-income households while also improving customer service for all tax filers.

After a decade of cuts severely undermined the agency’s ability to enforce the nation’s tax laws and serve taxpayers, the IRA created an $80 billion, ten-year mandatory funding stream — funding provided directly in authorizing law as opposed to funding provided through the annual appropriations process. This funding will enable the IRS to undertake the years-long process of hiring and training more compliance and customer service staff and to make needed technology upgrades. But debt ceiling negotiators last year agreed to rescind $20 billion of that funding.

Because every dollar spent on IRS enforcement raises multiple dollars in revenue from increased tax collections, these cuts to IRS funding cost revenue and add to the deficit. Recent research found that for every $1 the IRS spends auditing a very high-income taxpayer yields over $6 in revenue from audit collections (see chart), or $12 when combined with indirect revenue from increased voluntary compliance.

The Treasury Department estimates that restoring and extending the mandatory funding would raise a net $236 billion over ten years by ensuring that high-income and high-wealth households pay more of the tax that they already owe under current law but are failing to pay.

Tagged Federal tax

Biden’s Budget Closes Estate Tax Loopholes

President Biden’s 2025 budget calls for ending the 2017 Trump tax law’s tax cuts for people with more than $400,000 in income, including the law’s deeply regressive estate tax cuts. It would further strengthen the estate tax by closing loopholes that allow wealthy households to pass substantial assets to heirs tax-free.

Policymakers have substantially weakened the estate tax in recent decades (see chart). Most recently, the 2017 tax law doubled the amount that a wealthy couple can pass to heirs tax-free from $11 million to $22 million, indexed for inflation. The few estates large enough to remain taxable — fewer than 1 in 1,000 estates nationwide — will receive a tax cut of $4.4 million per couple under the 2017 provisions.

Moreover, the few estates large enough to potentially face the tax can use loopholes to reduce or eliminate their estate tax liability, such as by artificially valuing their assets at less than their true value or by using certain kinds of trusts to pass considerable assets along tax-free.

The estate tax is a highly progressive tax, affecting only the wealthiest households in the country. The 2017 law’s cuts to the estate tax should end on schedule in 2025. The Biden budget’s proposals to limit egregious estate tax loopholes would strengthen the estate tax and raise around $100 billion over ten years, according to the Treasury Department.

Policymakers could strengthen the estate tax beyond what’s in the President’s budget by restoring the estate tax parameters that were in place in 2009 — that is, returning the exemption to $7 million per couple and reinstating a 45 percent top tax rate. Even with that change, less than 2 percent of estates would be taxable, and it would raise about $160 billion over ten years. These substantial revenues could be used to help finance high-value investments in people and communities.

Tagged Federal tax

Mandatory Housing Proposals Include Important Investments, but Only a Small Share Goes to Those With the Greatest Need

The President’s budget proposes $183 billion over ten years in mandatory spending and tax credits designed to reduce housing costs. This includes significant proposals to expand rental assistance and help people with the lowest incomes afford housing, but the bulk of the funding would go toward housing development and homeownership subsidies that, while often worthwhile, mainly benefit people with somewhat higher incomes and less pressing needs. Just 28 percent of the funding goes to programs that would primarily assist people with incomes around or below the poverty line, even though most people paying over half their income for housing, living in severely substandard homes, or experiencing homelessness have incomes at that level.

Two of the proposals that would assist people with the lowest incomes would establish groundbreaking rental assistance guarantees for everyone meeting certain criteria. The President’s 2024 budget was the first time an administration requested mandatory funding for guaranteed rental assistance. This year’s request continues to call for $9 billion over ten years to guarantee rental assistance beginning in 2025 for the estimated 20,000 youth who age out of foster care each year and $13 billion over ten years to phase in guaranteed assistance to veterans with extremely low incomes.

We need to build toward rental assistance policies that provide assistance to everyone who needs it. The Administration’s proposals to guarantee rental assistance to some people in need is an important first step. However, substantial additional funding is needed beyond what the budget proposes. An income-based expansion strategy that guarantees rental assistance first to people with the lowest incomes, rather than focusing on specific subpopulations, would ensure that people with the greatest needs are prioritized and would be the most equitable approach.

Tagged Housing

President’s Budget Proposes National Paid Leave Program

The President’s budget proposes a new national, comprehensive paid leave program. The program would let all workers take up to 12 weeks to bond with a new child, care for a seriously ill loved one, heal from their own illnesses, find safety from domestic violence, or deal with the upheaval caused by a military deployment. It would also allow three days of leave for grieving families. The budget includes $325 billion to fund the program but does not lay out details on benefits and financing.

The U.S. stands alone among wealthy nations in lacking a national paid leave program, with only 1 in 5 workers with wages at or below the median having access to paid family leave. There is bipartisan support for establishing a national paid leave program, which is fueled by widespread public support — but there are still significant differences between the parties on how to pay for paid leave.

Tagged Social Security

President Biden Pledges to Work With Congress to Improve SSI

While the President’s budget does not include specific policy proposals related to Supplemental Security Income (SSI), it does pledge that the Administration will work with Congress to improve SSI benefits. Older adults with low incomes and people with disabilities need more help from a strengthened SSI program — for example, by increasing the program’s woefully outdated asset limit, which restricts beneficiaries to just $2,000 in total savings (see chart).

Tagged Social Security

President’s Budget Strengthens Social Security

The President’s budget includes four principles for strengthening Social Security:

  • No benefit cuts or privatization;
  • Start by asking the highest-income people to pay more;
  • Improve Social Security and Supplemental Security Income benefits, “especially for those who face the greatest challenges making ends meet;” and
  • Invest in the Social Security Administration to improve customer service.

Social Security, the nation’s most effective poverty reduction and social insurance program (see chart), faces a funding shortfall about a decade from now. It is critical that policymakers fill Social Security’s financing gap — and that they do so in a way that keeps the program’s promises to workers and beneficiaries and does more to protect people with low incomes from hardship.

Tagged Social Security

President’s Budget Builds on Coverage Gains Made Since the ACA’s Coverage Expansions Took Effect 10 Years Ago

The President’s budget builds on policies created by the Affordable Care Act (ACA), calling on Congress to make enhanced marketplace premium tax credits permanent and to close the Medicaid coverage gap.

The ACA expanded eligibility for health coverage in two main ways. It created health insurance marketplaces that offer comprehensive coverage with federal financial assistance that reduces premiums and deductibles, and it allowed states to expand Medicaid to adults with household income up to 138 percent of the federal poverty level (about $20,780 annually for an individual or $35,630 for a family of three in 2024). Both of these coverage expansions took effect in 2014.

As of January 2024, 21.3 million people selected a 2024 ACA marketplace plan (see chart), and 40 states and the District of Columbia have expanded Medicaid. The number of people who are uninsured dropped from 45.2 million in 2013 to 26.4 million in 2022, a historic decline. The ACA’s coverage expansions drove a precipitous decline in the uninsured rate, which fell from 14.5 percent in 2013 to 8 percent in 2022.

Temporary enhancements to premium tax credits, originally enacted in 2021 and extended through 2025 by the Inflation Reduction Act, have reduced ACA marketplace enrollees’ premiums for the past four years, making it easier for more people to afford marketplace coverage.

Making these enhanced tax credits permanent will help maintain and improve coverage gains. And the proposal to close the Medicaid coverage gap — which prevents over 1.6 million people with income below the federal poverty level from accessing affordable coverage — would address a glaring injustice in our health care system. We’ll have more on the coverage gap proposal soon.

Tagged Health

Parrott: President’s Budget Lays Out Sound Architecture for Key Policy Decisions That Will Shape the Nation’s Future

CBPP President Sharon Parrott has commented on President Biden’s fiscal year 2025 budget, beginning:

President Biden’s 2025 budget lays out a sound approach to key decisions that need to be made next year, regardless of the outcomes of the elections: a fairer tax code that raises more revenues from wealthy people and profitable corporations to invest in people, communities, and the economy and to improve our fiscal outlook. 

Read the full statement here.

Tagged Federal budget

Biden Budget Boosts Funding for SSA Customer Service

There’s good news for Social Security in the President’s budget. President Biden proposes a much-needed increase in the customer service budget for the Social Security Administration (SSA) of $1.3 billion, or 9 percent compared to 2023. This investment would improve customer service.

SSA has struggled to serve the public after over a decade of restricted funding (see chart). Being forced to serve millions more people with fewer staff has caused major problems for applicants and beneficiaries, including long hold times on the phone and record-long waits for disability determinations. To turn things around, the agency needs more investment. Recent funding boosts for IRS customer service has shown how funding can make a real difference, with the IRS working through its tax return backlog and sharply improving its call center wait times.

Tagged Social Security

Biden Budget’s International Tax Proposals Would Limit Profit Shifting and Raise Revenue

President Biden’s budget calls for Congress to enact provisions that would better align with the global minimum tax agreement the Administration helped negotiate and a number of countries have begun to implement. Under the agreement, countries commit to setting a 15 percent floor on global corporate tax rates — up from an effective zero percent floor today. These proposals would build on that agreement by ensuring that U.S. multinationals’ foreign profits are taxed at a 21 percent rate and that more foreign profits are subject to U.S. tax. They would also penalize foreign multinationals that operate in the U.S. if they earn profits in a country that does not impose adequate taxes (a part of the international agreement).

As we’ve highlighted, the 2017 Trump tax cuts were skewed to the rich, expensive, and have failed to deliver on their economic promises. As the debate begins on the future of those tax cuts, policymakers can begin to build a better tax system by revisiting the 2017 law’s permanent corporate tax changes, including its international tax changes that continue to allow U.S.-based multinationals to avoid tax through significant foreign profit shifting (see chart).

The Treasury Department estimates that these and other international tax reform proposals would raise more than $600 billion over ten years.

Tagged Federal tax

Biden Budget Proposes a Needed Partial Reversal of Corporate Tax Rate Cut

The 2017 Trump tax cut was skewed to the rich, expensive, and failed to deliver on its economic promises. Few provisions exemplified these three strikes more than the law’s centerpiece: a deep cut in the corporate tax rate from 35 percent to 21 percent. President Biden’s 2025 budget proposes partially reversing this corporate tax cut — central to a much-needed course correction on tax.

This windfall for wealthy shareholders costs the Treasury over $100 billion a year. During the 2017 tax debate, Trump Administration officials claimed the rate cut would “very conservatively” lead to a $4,000 boost in household income. Instead, a rigorous study by economists from the Joint Committee on Taxation and the Federal Reserve Board found that most workers didn’t get an earnings boost (see chart).

The corporate tax rate cut is unpopular — one reason proponents were determined to make it permanent in 2017. But in proposing to partially reverse to corporate rate cut from 21 percent to 28 percent, the Biden budget says the public deserves to revisit this misplaced priority. This reversal would raise $1.3 trillion over ten years. Those revenues could help make critical investments and improve our fiscal outlook.

Tagged Federal tax

Biden Budget Proposes a Needed Tax Policy Course Correction

President Biden’s new budget effectively opens the 2025 tax debate. The 2017 Trump tax cuts were skewed to the rich, expensive, and failed to deliver on their promises. Next year many, though not all, of these tax cuts expire and policymakers will have to decide the future direction of tax policy. The Biden budget correctly rejects this approach and proposes a much-needed course correction.

The Biden budget embraces three critical principles that should guide the new course:

  • Tax cuts for people making over $400,000 should end on schedule. The President “opposes tax cuts for the wealthy — either extending tax cuts for the top two percent of Americans earning over $400,000 or bringing back deductions and other tax breaks for these households.”
  • The tax system needs to raise more revenues from wealthy people and profitable corporations to offset any tax cuts extended or expanded for those with incomes below $400,000, to finance high-value investments in people and communities, and to improve our fiscal outlook. The President “supports paying for extending tax cuts for people earning less than $400,000 with additional reforms to ensure that wealthy people and big corporations pay their fair share, so that the problematic sunsets created by President Trump and congres­sional Republicans are addressed in a fiscally responsible manner.”
  • Our priorities need to shift from the interests of wealthy shareholders and others with high incomes toward raising the living standards of low- and moderate-income households, reducing child poverty, and making high-value investments in areas like health, housing, and child care. For example, the centerpiece of the 2017 tax cut was a deep and permanent cut in the corporate tax rate, while its expansion of the Child Tax Credit was temporary and left millions of children behind — and the paltry Earned Income Tax Credit for low-paid workers without children got no boost at all. These priorities need to be reversed.
Tagged Federal tax

President Biden will release his fiscal year 2025 budget on Monday, March 11. We’ll be posting our analysis of the budget here. Bookmark and visit this page for more.

Read Sharon Parrott’s commentary previewing the budget and critical fiscal policy choices policymakers will face in 2025.