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Federal budget 2025

The Biden Administration’s FY2025 budget proposal is poised to significantly impact sectors across the board, from healthcare to corporate taxation. With a staggering $7.3 trillion in spending against $5.5 trillion in revenues, and a projected deficit of $1.8 trillion, the budget outlines bold steps toward fulfilling election-year promises, such as expanded Medicare negotiations and significant tax reforms aimed at higher earners and corporations. It also introduces measures aimed at protecting entitlements and reducing the deficit, amid the backdrop of a politically charged environment with looming discretionary spending battles and a steadily climbing national debt.

Read on for the top 10 highlights from the President’s proposed FY2025 budget. Here, we focus on the elements most likely to impact the regulatory and economic environment in which your organization operates. For a deeper dive, watch our recent webinar for an in-depth analysis of the proposed FY2025 budget with our award-winning newsroom.

1. Topline Numbers

  • Total spending: 7.3 trillion
  • Total revenues: $5.5 trillion
  • Deficit: $1.8 trillion

2. Election-Year Promises

  • Expanded Medicare negotiations to lower drug prices
  • Restoring an expanded child tax credit to reduce child poverty
  • $10,000 mortgage relief credit over 2 years to lower housing costs
  • Full funding for Women, Infants, and Children (WIC) nutrition program

3. Higher Taxes on Corporations and Upper-Income Households

  • Raise corporate tax rate from 21 percent to 28 percent
  • Raise corporate minimum tax from 15 percent to 21 percent
  • Deny corporate tax deductions for employee compensation above $1 million
  • Quadruple the stock buyback tax from 1 percent to 4 percent
  • Set a 25 percent “billionaire” minimum tax

4. Protecting Entitlements

  • No cuts to Social Security or Medicare benefits
  • Increase the Medicare tax rate on incomes above $400,000
  • Close “loophole” allowing some businesses to avoid paying Medicare tax on profits
  • Higher taxes on wealthy households to extend Social Security solvency

5. Deficit Reduction

  • Biden claims $3.2 trillion in lower deficits over a decade compared to previous projections
  • CBO projects $20 trillion in deficits over 10 years compared to Biden’s $16.3 trillion
  • But Biden relies on tax increases that Republicans already reject
  • Corporate tax rate increase accounts for $1.35 trillion of the claimed deficit savings

6. Big Fight Over Discretionary Spending

  • Only about a quarter of total spending is subject to annual appropriations, but a ripe political target
  • Total discretionary budget pie of $1.67 trillion set by last year’s debt limit deal
  • Defense spending of $895.2 billion
  • Nondefense spending including side deals of $793.3 billion, a bigger boost than anticipated

7. Debt Climbs Steadily

  • Debt held by the public grows from nearly $30 trillion in FY2025 to $45 trillion in FY2034
  • As a share of economy, it grows from 102.2 percent of gross domestic product in FY2025 to 105.6 percent in FY2034

8. Economic Outlook

  • GDP grows 2 percent in FY2025 (Q4 to Q4), gradually increasing to 2.2 percent in the latter half of the decade with no recessions
  • Inflation holds steady at 2.3 percent through the decade
  • Unemployment falls from 4 percent in FY2025 to 3.8 percent by FY2028 and holds steady through the decade

9. Interest Payments Rising

  • The federal government is now paying more in interest on debt than on national defense
  • Net interest costs on the national debt grow from $965 billion in FY2025 to nearly $1.5 trillion in FY2034

10. Another Late Start

  • Budget comes a month late, according to budget law, but Congress still wrapping up this year’s spending
  • Election year means almost no prospect of finishing on time (Oct. 1)
  • Struggle over continuing resolutions this fall

Stay on Top of the Federal Budget Process

The intricacies of the Biden Administration’s FY2025 budget proposal present both challenges and opportunities. The proposed policies, from expanded healthcare negotiations to transformative tax reforms, could significantly alter the playing field for organizations across sectors. Understanding these nuances is not just about staying compliant; it’s about strategically positioning your organization to leverage new opportunities and mitigate potential risks. CQ’s comprehensive tools and resources are designed to empower you to stay ahead of legislative and regulatory changes. By providing real-time updates, news from our award-winning newsroom, detailed analyses, and strategic insights, CQ ensures that your team is equipped with the knowledge to make informed decisions and push your issues forward.