For Entertainment Purposes Only

I suppose I should pretend to have something introspective to say about Joe Biden’s budget, which commanded an outsized share of financial media attention on Thursday.

I’m not inclined to pretend, though, for three reasons.

First, and most obviously, the House is in Republican hands, even as the majority is razor-thin, and some of those hands are intent on throttling the US legislative process to death (figuratively speaking). It wouldn’t matter what was in Biden’s budget — the GOP doesn’t need to read it to hate it.

Second, nobody needs to read it, not the GOP or anybody else, because the interesting bits are basically just a list of initiatives the White House tried to pass previously to no avail, even when Democrats had both houses of Congress.

Third, all budgets are initially just wish lists, and almost without fail, they’re derided upon release by the opposing party as “dead on arrival.”

So, any and all takes on the budget (including this one) should come with a “for entertainment purposes only” disclaimer.

With that out of the way, I’ll begrudgingly walk through a few highlights.

The headliner was a 25% billionaires tax. I’ve been over that idea in one form or another on too many occasions to count in these pages. On some days, I see why it’s controversial, but on most days I don’t. There have been times in my life when I failed to establish the most favorable setup for my own financial affairs and ended up paying far more in taxes than I would’ve been legally required to pay had I been smarter and planned ahead. Even during those years, I can’t recall a time when I thought, in April, “This is egregious and I won’t stand for it. I’m writing a letter to somebody, and then I’m going to become a Republican donor.” With apologies (and I don’t even know who I’m apologizing to) there simply isn’t anything especially onerous about the tax rates levied on America’s well-to-do.

I realize some readers will dispute that contention, and I certainly understand it’s more or less true depending on your circumstances and state of residence. But generally speaking, the US government doesn’t demand much from the country’s rich and whatever it does demand, American-style capitalism more than compensates by way of a perpetual motion machine of wealth creation. The key to being rich in America is having money, and that tautological reality optimizes around itself on the way up, becoming more efficient the richer you get, in an exponential process.

So, no. I don’t think it’s unfair that the government establish a mandate that says the richest among us have to pay at least something, and that whatever that something is needs to be a meaningful percentage. I’m not sympathetic to the idea that those who are rich are often those who create jobs and therefore should be somehow compensated for that on top of the percentage of workers’ sweat they already pocket as profits. It’s a rare business that makes billions with no workers, and if such businesses become commonplace in the era of automation and AI, that’s just another reason to demand the people who own those businesses pay something back to society.

Biden also wants to double the capital gains rate — for people making at least $1 million. And he wants to increase taxes on Americans — who make over $400,000. Admittedly, my lot in life has always been defined by a lack of dependents and the conspicuous absence of financial obligations not involving myself, which means I haven’t personally experienced the financial burden that goes along with children and large families. But even in an era when everything costs a lot, an investor who makes a million or more in a year and/or taxpayers who regularly bring in more than $400,000 per year in income, can unquestionably afford higher capital gains taxes and a reversion to a slightly higher top bracket rate.

Again, I readily concede that much depends on circumstances and state of residence, but consider that in part, Biden is just rolling back one small element of the Trump tax plan. And aligning tax treatment of investment income with regular income is hardly a new idea. Rich people were doing just fine prior to the TCJA. They’d do just fine under Biden’s plan too. It’d be a ludicrous stretch to suggest that anyone who’d be impacted by Biden’s plan would be put out in any material way.

As for raising the corporate tax rate to 28% and the hodgepodge of familiar proposals for closing loopholes and eliminating a tax break for real estate investors, I have no sympathy for the aggrieved whatsoever. For every loophole closed, the rich and their accountants will find a new one, I can assure you of that. If Wall Street has to “reinvent” (as Bloomberg put it) the wheel when it comes to structuring property and investment deals, investors will live (long and prosper).

And here’s the thing: Even if you don’t agree with what I’ve just said, it doesn’t matter, because Biden’s tax proposals have no hope of becoming law. Republicans aren’t going to go for most of them, and probably not for any of them. So, for the trickle-down fans among you, I say this: Rest easy. Joe’s not going to succeed in skimming any foam off your $12 cappuccino so the poor can have a sip of milk.

That’s a summary of the controversial elements. Less contentious proposals in the budget include initiatives to cut prescription drug costs, preschool funding for four-year-olds, a plan to increase hiring grants for police by two-thirds (so, no, Biden apparently isn’t on board with defunding “the blue”) and money earmarked for affordable housing, lunch for kids and cancer research.

The Pentagon would get $842 billion, a post-Vietnam record if you don’t count what America wasted destroying Iraq or the Afghanistan campaign, which began two decades ago as a mountain manhunt for a mass murderer, and ended 10 years after his death in a confused, blood-soaked melee.

Somehow, this is all supposed to reduce the deficit by $3 trillion by the time Biden turns 90. In the near-term, it’d balloon the deficit by $200 billion, though. The juxtaposition between the House Republican agenda and the White House’s roadmap is stark. The GOP wants $150 billion in spending cuts with no tax hikes. Biden wants nearly $80 billion in additional spending, with much higher taxes. If the two sides can’t come to an agreement, the US might default later this year.

On that latter concern, Jerome Powell reminded politicians on Wednesday that he doesn’t have a good backup plan in the event of a default. “Congress raising the debt ceiling is really the only alternative. There are no rabbits in hats to be pulled out on this,” Powell warned House lawmakers. “No one should assume that the Fed can protect the economy from the nonpayment of the government’s bills, let alone a debt default or something of that nature.”