President Biden speaks at the International Association of Fire Fighters legislative conference in Washington, D.C. on March 6. Photo: Andrew Harrer/Bloomberg via Getty Images
President Biden's newest plan to bolster Medicare by raising taxes on the rich offers a glimpse into his policy priorities ahead of next year's presidential race — despite facing a tough path forward in Congress.
The big picture: Biden's full budget proposal is set to be released Thursday as the deadline to raise the debt ceiling looms.
- The proposal comes as Medicare faces an uncertain future —the program's trust fund is expected to go bankrupt as soon as 2028. Medicare spending makes up one of the largest line items in the U.S. budget.
- Top Republicans have insisted they are not going to propose cuts to Medicare or Social Security during debt ceiling talks, but Biden has argued that previous GOP proposals show they might.
Biden's plan to keep Medicare alive
In a preview released Tuesday, the White House says the new budget would make several changes to extend the life of Medicare "by at least 25 years."
- The plan would hike a Medicare tax rate, known as the net investment income tax, on "earned and unearned income above $400,000" from 3.8% to 5%.
- Biden also suggests eliminating "loopholes in existing Medicare taxes" to make sure people making more than $400,000 are paying their share — and using the revenue to bankroll Medicare's trust fund for hospital benefits.
- Biden's proposal says it also "strengthens" Medicare's ability to negotiate drug prices, building on the Inflation Reduction Act.
- The savings from those negotiations — estimated to be around $200 billion over a decade — would also be put toward the Medicare trust fund.
What he's saying: "The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits," Biden wrote in a New York Times op-ed on Tuesday.
- According to the White House, Biden's plan would actually cut costs for beneficiaries by capping Medicare Part D cost-sharing at $2 per monthly prescription for some generic drugs.
- The plan also eliminates cost-sharing for three mental or behavioral health visits per year and "requires parity between physical health and mental health coverage in Medicare."
- "If the MAGA Republicans get their way, seniors will pay higher out-of-pocket costs on prescription drugs and insulin, the deficit will be bigger, and Medicare will be weaker," Biden wrote in the Times.
Where Republicans stand on Medicare
Florida Sen. Rick Scott, the head of the Senate GOP campaign arm during the last election, previously proposed sunsetting all federal legislation — which would include Medicare and Social Security — prompting attacks from Democrats.
- But facing criticism, top Republicans have since sought to distance themselves from any potential cuts. "That was the Scott plan, that's not a Republican plan, that was the Rick Scott plan," Senate Minority Leader Mitch McConnell said in February.
- Scott himself has since walked back his plan, adding exceptions for Medicare and Social Security, among other things.
- Meanwhile, House Speaker Kevin McCarthy (R-Calif.) has insisted that Social Security and Medicare cuts should be "off the table."
Between the lines: Republicans' commitment to leaving entitlement programs untouched is at odds with the party's goal of creating a balanced budget over the next decade, which is nearly impossible to do without raising taxes, cutting defense spending, or cutting entitlement spending, Axios' Caitlin Owens reports.
- Presidential budget proposals are largely symbolic, since Congress ultimately holds the power of the purse, but the plan sheds light on Biden's political strategy and messaging as he prepares for a likely 2024 presidential bid.
- Congress is supposed to pass a budget resolution by April 15, but often blows past the deadline, Axios' Hans Nichols reports.
Go deeper: Scoop: Inside Biden's big deficit-cutting plan
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