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    Democrats’ Dream of a Wealth Tax Is Alive. For Now.

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    A narrow Supreme Court ruling left the door open for Congress to expand taxes on billionaires, but it’s not a guarantee.For years, liberal Democrats have agitated for the United States to tax wealth, not just income, as a way to ensure that rich Americans who derive wealth from real estate, stocks, bonds and other assets were paying more in taxes.On Thursday, that dream survived a Supreme Court scare, but just barely.Thanks to a narrow court ruling, a raft of plans to use the tax code to address the gaping divide between the very richest Americans and everyone else appear set to live for years to come in the campaign proposals and official budgets of top Democrats.The idea of a wealth tax was not directly before the court on Thursday. Justices were considering the constitutionality of a new tax imposed under former President Donald J. Trump that applies to certain income earned by businesses overseas. But in taking the case, the court could have pre-emptively ruled federal wealth taxation unconstitutional.It did not, and liberal groups celebrated the victory.“The Supreme Court also could have taken an activist turn of the worst kind by pre-emptively ruling federal wealth taxes unconstitutional today,” Amy Hanauer, the executive director of the Institute on Taxation and Economic Policy, which supports higher taxes on corporations and the wealthy, said in a statement. “To its credit, the court did not do so.”But the case also offered a window into the legal fight to come over various iterations of a wealth tax should Congress ever adopt one. It showed a solid four justices firmly opposed to such a tax — and two more who appeared skeptical.“This is a narrow decision,” Joe Bishop-Henchman, the vice president of the National Taxpayers Union, which opposes wealth tax proposals, said in a statement on Thursday. But, he added, “the court makes clear it is not opening the door to a wealth tax.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    U.S. Debt on Pace to Top $56 Trillion Over Next 10 Years

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    Congressional Budget Office projections released on Tuesday show a grim fiscal backdrop ahead of tax and debt limit fights.The United States is on a pace to add trillions of dollars to its national debt over the next decade, borrowing money more quickly than previously expected, at a time when big legislative fights loom over taxes and spending.The Congressional Budget Office said on Tuesday that the U.S. national debt is poised to top $56 trillion by 2034, as rising spending and interest expenses outpace tax revenues. The mounting costs of Social Security and Medicare continue to weigh on the nation’s finances, along with rising interest rates, which have made it more costly for the federal government to borrow huge sums of money.As a result, the United States is expected to continue running large budget deficits, which are the gap between what America spends and what it receives through taxes and other revenue. The budget deficit in 2024 is projected to be $1.9 trillion, up from a forecast earlier this year of $1.6 trillion. Over the next 10 years, the annual deficit is projected to swell to $2.9 trillion. As a share of the economy, debt held by the public in 2034 will be 122 percent of gross domestic product, up from 99 percent in 2024.The new projections come as lawmakers are gearing up for a big tax and spending battle. Most of the 2017 Trump tax cuts will expire in 2025, forcing lawmakers to decide whether to renew them and, if so, how to pay for them. The United States will also again have to deal with a statutory cap on how much it can borrow. Congress agreed last year to suspend the debt limit and allow the federal government to keep borrowing until next January.Those fights over tax and spending will be taking place at a time when the country’s fiscal backdrop is increasingly grim. An aging population continues to weigh on America’s old-age and retirement programs, which are facing long-term shortfalls that could result in reduced retirement and medical benefits.Both Democrats and Republicans expressed concern about the national debt as inflation and interest rates soared over the last few years, but spending has been difficult to corral. The C.B.O. report assumes that the 2017 tax cuts are not extended, but that is highly unlikely. President Biden has said he will extend some of the tax cuts, including those for low- and middle-income earners, and former President Donald J. Trump has said he will extend all of them if he wins in November. Fully extending the tax cuts could cost around about $5 trillion over 10 years.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Biden Budget Lays Out Battle Lines Against Trump

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    President Biden and former President Donald J. Trump offer vastly different policy paths on almost every aspect of the economy.President Biden in his budget this week staked out major economic battle lines with former President Donald J. Trump, the presumptive Republican presidential nominee. The proposal offers the nation a glimpse of the diverging directions that retirement programs, taxes, trade and energy policy could take depending on the outcome of the November election.During the past three years, Mr. Biden has enacted key pieces of legislation aimed at bolstering the green energy economy, making infrastructure investments and reinforcing America’s domestic supply chain with subsidies for microchips, solar technology and electric vehicles. Few of those priorities are shared by Mr. Trump, who has pledged to cut more taxes and erect new trade barriers if re-elected.The inflection point will be arriving as the economy enters the final stretch of what economists are now expecting to be a “soft landing” after two years of high inflation. However, the prospect of a second Trump administration has injected increased uncertainty into the economic outlook, as companies and policymakers around the world brace for what could be a dramatic shift in the economic stewardship of the United States.Here are some of the most striking differences in the economic policies of the two presidential candidates.Sparring over the social safety netAt first glance, Mr. Biden and Mr. Trump might appear to have similar positions on the nation’s social safety net programs. In 2016, Mr. Trump broke with his fellow Republicans and refused to support cuts to Social Security or Medicare. Mr. Biden has long insisted that the programs should be protected and has hammered Republicans who have suggested cutting or scaling back the programs.In his budget proposal on Monday, Mr. Biden reiterated his commitment to preserving the nation’s entitlement system. He called for new efforts to improve the solvency of Social Security and Medicare, including making wealthy Americans pay more into the health program. However, his plans were light on details regarding how to ensure both programs’ long-term sustainability.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Yellen Hits Trump Over Handling Of Economy

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    The Treasury Secretary acknowledged that consumer prices, which have weighed on economic sentiment, continue to be too high.Treasury Secretary Janet L. Yellen criticized the Trump administration’s economic policies, while praising the Biden administration for successfully navigating the pandemic.Yuri Gripas for The New York TimesTreasury Secretary Janet L. Yellen defended the Biden administration’s economic agenda on Thursday, drawing sharp contrasts with the policies of the Trump administration as President Biden begins to make the general election argument that he has been a stronger steward of the economy than his predecessor.The comments from Ms. Yellen came after new data released on Thursday bolstered that message: The United States economy grew at a healthy clip over the past year, surpassing 3 percent and defying expectations of a recession. The strong numbers coincided with an effort by the White House to amplify the president’s economic record and dispatch his top economic advisers around the country to make the case that his strategy is working.Biden administration officials are trying to convince a skeptical public that, while they may feel pessimistic about the economy, its performance is delivering gains to average Americans. Officials are expected to spend the coming months highlighting the investments that Mr. Biden has directed toward infrastructure, domestic manufacturing and clean energy projects.In a speech at the Economic Club of Chicago, Ms. Yellen argued that the Biden administration had successfully navigated challenging headwinds caused by the pandemic and led a recovery that has outpaced those in the rest of the world. She also suggested that the Biden administration needed more time to tackle affordability issues, such as improving access to child care and housing.“Our economic agenda is far from finished,” Ms. Yellen said.The Treasury secretary also took the rare step of directly criticizing the policies of Mr. Biden’s predecessor and likely opponent, former President Donald J. Trump. Pointing to Mr. Trump’s repeated pledges to rebuild America’s roads and bridges, she recalled how those promises went unfulfilled.“Our country’s infrastructure has been deteriorating for decades,” Ms. Yellen said. “In the Trump administration, the idea of doing anything to fix it was a punchline.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    Higher Rates Stoke a Growing Chorus of Deficit Concerns

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    A long period of higher interest rates would make the government’s large debt pile costly, a possibility that is fueling a conversation about debt sustainability.The U.S. government’s persistent budget deficit and growing debts were low on Wall Street’s list of worries when interest rates were at rock bottom for years. But borrowing costs have risen so sharply that it is causing many investors and economists to fret that the United States’ big debt pile could prove less sustainable.Federal Reserve officials have raised interest rates to about 5.3 percent since early 2022 in a bid to control inflation. Officials predicted at their meeting last month that interest rates could remain high for years to come, shaking expectations among investors who had bet on rates falling notably as soon as next year.The realization that the Fed could keep borrowing costs high for a long time has combined with a cocktail of other factors to send long-term interest rates soaring in financial markets. The rate on 10-year Treasury bonds has been climbing since July, and reached a nearly two-decade high this week. That matters because the 10-year Treasury is like the market’s backbone: It helps drive many other borrowing costs, from mortgages to corporate debt.The exact cause of the latest run-up in Treasury rates is hard to pinpoint. Many economists say a combination of drivers is probably helping to drive the pop — including strong growth, fewer foreign buyers of America’s debt, and concerns about debt sustainability in and of itself.What’s clear is that if rates remain elevated, the federal government will need to pay investors more interest in order to fund its borrowing. America’s gross national debt stands just above $33 trillion, more than the total annual output of the American economy. The debt is projected to keep growing both in dollar figures and as a share of the economy.While the climbing cost of holding so much debt is stoking conversations among economists and investors about the appropriate size of the government’s annual borrowing, there is no consensus in Washington for deficit reduction in the form of either higher taxes or big spending cuts.Still, the renewed concern is a stark reversal after years in which mainstream economists increasingly thought that the United States might have been too timid when it came to its debt: Years of low interest rates had convinced many that the government could borrow cheap money to pay for relief in times of economic trouble and investments in the future.The deficit as a share of the economy rose this year under President Biden even though the economy was growing.Pete Marovich for The New York Times“How big of a problem deficits are depends — and it depends very critically on interest rates,” said Jason Furman, an economist at Harvard and former economic official under the Obama administration. “That’s changed a lot,” so “your view on the deficit should change as well.”Mr. Furman had previously estimated that the growing cost of interest on federal debt would remain sustainable for some time, after factoring in inflation and economic growth. But now that rates have climbed so much, the calculus has shifted, he said.Since 2000, the United States has run an annual budget deficit, meaning it spends more than it receives in taxes and other revenue. It has made up the gap by borrowing money.Tax cuts, spending increases and emergency economic assistance approved by both Democratic and Republican presidents has helped fuel the rising deficits in recent years. So has the aging of America’s population, which has driven up the costs of Social Security and Medicare without corresponding increases in federal tax rates. The deficit as a share of the economy rose this year under President Biden even though the economy was growing, just as it did in the prepandemic years under President Donald J. Trump.Now, borrowing costs are poised to add to the gap.Higher interest rates are a leading cause, along with surprisingly weak tax collections, of what the Congressional Budget Office projects will be a doubling of the federal budget deficit over the last year. The deficit, when properly measured, grew from $1 trillion in the 2022 fiscal year to an estimated $2 trillion in the 2023 fiscal year, which ended last month.If borrowing costs climb further — or simply remain where they are for an extended period — the government will accumulate debt at a much faster rate than officials expected even a few months ago. A budget update released by Biden administration economists in July predicted annual average interest rates on 10-year Treasury bonds would not exceed 3.7 percent at any time over the next decade. Those rates are now hovering around 4.7 percent.That recent surge in longer-term bond yields ties back to a number of factors.While the Federal Reserve has been raising short-term interest rates for roughly 18 months, rates on longer-term bonds had remained fairly stable over the first half of this year. But investors have been slowly coming around to the possibility that the Fed will leave interest rates higher for longer — partly because growth has remained solid even in the face of elevated borrowing costs.At the same time, there have been fewer buyers for government bonds. The Fed has been shrinking its balance sheet of bonds as it reverses a pandemic-era stimulus policy, which means that it is no longer buying Treasuries — taking away a source of demand. And key foreign governments have also pulled back from bond purchases.“We’ve whittled down to a smaller universe of buyers,” said Krishna Guha, head of global policy and central bank strategy at Evercore ISI.Some analysts have suggested that the pickup in bond yields could also tie back to concerns about debt sustainability. To pay higher interest costs, the government may need to issue even more debt, compounding the problem — and focusing attention on America’s mammoth debt pile, said Ajay Rajadhyaksha, global chairman of research at Barclays.“The problem is not just that number,” he said, referencing the increasing deficit. “The problem is that this economy is as good as it gets.”The economy has remained strong even though the Federal Reserve has raised borrowing costs. That has many expecting the Fed to leave rates higher for longer.Jim Wilson/The New York TimesThat, several economists have said, is the core of the issue: America is borrowing a lot even at a time when the unemployment rate is very low and growth is strong, so the economy does not need a lot of government help.“Right now we have an incredible amount of issuance at the same time as the Fed is messaging higher for longer,” said Robert Tipp, chief investment strategist at PGIM Fixed Income, noting that typically higher issuance comes in periods of turmoil when central bank policy is more accommodative. “This is like a wartime budget deficit but without any help from the central bank. That is why this is so different.”White House officials say it is too early to know whether rising bond yields should spur Mr. Biden to add new deficit-reduction proposals to the $2.5 trillion in plans he included in this year’s budget. Those proposals consist largely of tax increases on corporations and high earners.“We might be having a different discussion about this a month from now,” said Jared Bernstein, the chair of the White House Council of Economic Advisers. “And when you’re writing budgets, you don’t go back and change your path lightly.”The Treasury Department has sold close to $16 trillion of debt for the year through September, up roughly 25 percent from the same period last year, according to data from the Securities Industry and Financial Markets Association. Much of that issuance replaced existing debt that was coming due, leaving a net debt issuance of around $1.7 trillion, more than at any other point over the past decade except for the pandemic-induced bond binge in 2020. The Treasury’s own advisory committee forecasts the size of government debt sales to rise another 23 percent in 2024.Maya MacGuineas, the president of the bipartisan Committee for a Responsible Federal Budget and a longtime proponent of reducing deficits, said it was hard to tell what had caused rates to climb recently. Still, she said, the move serves as a “reminder.”“From a fiscal perspective, the story is very simple: If you borrow too much, you become increasingly vulnerable to higher interest rates,” she said.Santul Nerkar More

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    America Set to Hit Its Borrowing Limit Today, Raising Economic Fears

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    The milestone will not immediately affect markets or growth, but it sets the stage for months of entrenched partisan warfare.WASHINGTON — The United States is expected to hit a congressionally imposed borrowing limit on Thursday, requiring the Treasury Department to engage in accounting maneuvers to ensure the federal government can keep paying its bills.The milestone of hitting the country’s $31.4 trillion debt cap is the product of decades of tax cuts and increased government spending by both Republicans and Democrats. But at a moment of heightened partisanship and divided government, it is also a warning of the entrenched partisan battles that are set to dominate Washington in the months to come, and that could end in economic shock.Newly empowered Republicans in the House have vowed that they will not raise the borrowing limit again unless President Biden agrees to steep cuts in federal spending. Mr. Biden has said he will not negotiate conditions for a debt-limit increase, arguing that lawmakers should lift the cap with no strings attached to cover spending that previous Congresses authorized.Treasury officials estimate the measures that they will begin employing on Thursday will enable the government to keep paying federal workers, Medicare providers, investors who hold U.S. debt and other recipients of federal dollars at least until early June. But economists warn that the nation risks a financial crisis and other immediate economic pain if lawmakers do not raise the limit before the Treasury Department exhausts its ability to buy more time.The episode has prompted fears in part because of the lessons both parties have taken from more than a decade of debt-limit fights. A bout of brinkmanship in 2011 between House Republicans and President Barack Obama nearly ended in the United States defaulting on its debt before Mr. Obama agreed to a set of caps on future spending increases in exchange for lifting the limit.Most Democrats have solidified in their position that negotiations over the debt limit only enhance the risks of economic calamity by encouraging Republicans to use it as leverage. That is particularly true of Mr. Biden, who successfully stared down Republicans and won an increase in 2021 with no stipulations.Newly elected Republicans, emboldened by anger among their base and conservative advocacy groups over failures in the past to exact concessions for raising the limit, have pledged not to let that happen again.Treasury Secretary Janet L. Yellen has dismissed ideas for lifting the borrowing cap unilaterally, such as minting a $1 trillion coin, as fanciful.Sarahbeth Maney/The New York TimesIn reality, both parties have approved policies that fueled the growth in government borrowing. Republicans repeatedly passed tax cuts when they controlled the White House over the last 20 years. Democrats have expanded spending programs that have often not been fully offset by tax increases. Both parties have voted for large economic aid packages to help people and businesses endure the 2008 financial crisis and the 2020 pandemic recession.Federal spending declined from its pandemic high in 2022, reaching nearly $6 trillion in the fiscal year, or just under 24 percent of the economy. The federal budget deficit, which is the shortfall between what the United States spends and what it takes in through taxes and other revenue, topped $1 trillion for the year. That is a decline from the past two years as emergency pandemic spending expired, though the Biden administration predicts the deficit will rise again in the current fiscal year.Understand the U.S. Debt CeilingCard 1 of 4What is the debt ceiling? More

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    Republicans Denounce Inflation, but Few Economists Expect Their Plans to Help

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    Proposed tax and spending cuts by the G.O.P., which is making a push to take back Congress, are unlikely to bring down rapidly rising prices any time soon.WASHINGTON — Republicans are riding a wave of anger over inflation as they seek to recapture the House and the Senate this fall, hammering Democrats on President Biden’s economic policies, which they say have fueled the fastest price gains in 40 years.Republican candidates have centered their economic agenda on promises to help Americans cope with everyday price increases and to increase growth. They have pledged to reduce government spending and to make permanent parts of the 2017 Republican tax cuts that are set to expire over the next three years — including incentives for corporate investment and tax reductions for individuals.And they have vowed to repeal the corporate tax increases that Mr. Biden signed into law in August while gutting funding for the Internal Revenue Service, which was given more money to help the United States go after high-earning and corporate tax cheats.“The very fact that Republicans are poised to take back majorities in both chambers is an indictment of the policies of this administration,” said Senator Bill Cassidy, Republican of Louisiana, noting that “if you look at the spending that they did on a partisan basis, we certainly would be able to stop that.”But while Republicans insist they will be better stewards of the economy, few economists on either end of the ideological spectrum expect the party’s proposals to meaningfully reduce inflation in the short term. Instead, many say some of what Republicans are proposing — including tax cuts for high earners and businesses — could actually make price pressures worse by pumping more money into the economy.“It is unlikely that any of the policies proposed by Republicans would meaningfully reduce inflation in 2023, when rapidly rising prices will still be a major problem for the economy and for consumers,” said Michael R. Strain, an economist at the conservative American Enterprise Institute.As they position themselves for the midterm elections, Republicans have also indicated that they might try to hold the nation’s borrowing limit hostage to achieve spending cuts. The debt ceiling, which caps how much the federal government can borrow, has increasingly become a fraught arena for political brinkmanship.The State of the 2022 Midterm ElectionsBoth parties are making their final pitches ahead of the Nov. 8 election.Florida Governor’s Debate: Gov. Ron DeSantis and Charlie Crist, his Democratic challenger,  had a rowdy exchange on Oct. 24. Here are the main takeaways from their debate.Strategy Change: In the final stretch before the elections, some Democrats are pushing for a new message that acknowledges the economic uncertainty troubling the electorate.Last Dance?: As she races to raise money to hand on to her embattled House majority, Speaker Nancy Pelosi is in no mood to contemplate a Democratic defeat, much less her legacy.Secretary of State Races: Facing G.O.P. candidates who spread lies about the 2020 election, Democrats are outspending them 57-to-1 on TV ads for their secretary of state candidates. It still may not be enough.Multiple top Republicans have signaled that unless Mr. Biden agrees to reduce future government spending, they will refuse to lift the borrowing cap. That would effectively bar the federal government from issuing new bonds to finance its deficit spending, potentially jeopardizing on-time payments for military salaries and safety-net benefits, and roiling bond markets.Mr. Biden has tried to push back against the Republicans and cast the election not as a referendum on his economic policies, but as a choice between Democratic policies to reduce costs on health care and electricity and Republican efforts to repeal those policies. He has accused Republicans of stoking further price increases with tax cuts that could add to the federal budget deficit, and of risking financial calamity by refusing to raise the debt limit.“We, the Democrats, are the ones that are fiscally responsible. Let’s get that straight now, OK?” Mr. Biden said during remarks on Monday to workers at the Democratic National Committee. “We’re investing in all of America, reducing everyday costs while also lowering the deficit at the same time. Republicans are fiscally reckless, pushing tax cuts for the very wealthy that aren’t paid for, and exploiting the deficit that is making inflation worse.”The challenge for Mr. Biden is that voters do not seem to be demanding details from Republicans and are instead putting their trust in them to turn around an economy that voters believe is headed in the wrong direction. Polls suggest Americans trust Republicans by a wide margin to handle inflation and other economic issues.In a nationwide deluge of campaign ads and in public remarks, Republicans have pinned much of their inflation-fighting agenda on halting a stimulus spending spree that began under President Donald J. Trump and continued under Mr. Biden, in an effort to help people and businesses survive the pandemic recession. Those efforts have largely ended, and Mr. Biden has shown no desire to pass further stimulus legislation at a time of rapid price growth.Representative Jason Smith of Missouri, the top Republican on the House Budget Committee, said in a statement that “the first step in combating inflation is to stop the historically reckless spending spree occurring under one-party Democrat rule in Washington, and that will only happen with a Republican majority in Congress.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.“Republicans,” he added, “will fight to bring down the cost of living and impose fiscal restraint in Washington, and that begins by ensuring Democrats are not able to impose round after round of new inflationary spending.”Economists largely agree that the Federal Reserve is most responsible for fighting inflation, which policymakers are trying to do with rapid interest rates increases. But they say Congress could plausibly help the Fed by reducing budget deficits, in order to slow the amount of consumer spending power in the economy.One way to do that would be to significantly and quickly reduce federal spending. Such a move could result in widespread government layoffs and reduced support for low-income individuals — who would be less able to afford increasingly expensive food and other staples — and could prompt a recession. “The amount of cuts you’d have to do to move the needle on inflation are completely off the table,” said Jon Lieber, a former aide to Senator Mitch McConnell of Kentucky who is now the Eurasia Group’s managing director for the United States.Still, Mr. Lieber said that likelihood would not sully the Republican pitch to voters this fall. “Midterm votes are a referendum on the party in power,” he said, “and the party in power has responsibility for inflation.”“The very fact that Republicans are poised to take back majorities in both chambers is an indictment of the policies of this administration,” said Senator Bill Cassidy, a Republican.Haiyun Jiang/The New York TimesBiden administration officials contend that the Republican plans, rather than curbing inflation, could worsen America’s fiscal situation.Administration economists estimate that two policies favored by Republicans — repealing a new minimum tax on large corporations included in the Inflation Reduction Act and extending some business tax cuts from Mr. Trump’s 2017 legislation — could collectively increase the federal budget deficit by about $90 billion next year.Such an increase could cause the Federal Reserve to raise rates even faster than it already is, further choking economic growth. Or, alternatively, it could add a small amount to the annual inflation rate — perhaps as much as 0.2 percentage points. Fully repealing the Inflation Reduction Act would also mean raising future costs for prescription drugs for seniors on Medicare, including for insulin, and potentially raising future electricity costs.“Their plan to repeal the I.R.A. and double down on the Trump tax cuts for the wealthy will worsen inflation,” said Jared Bernstein, a member of Mr. Biden’s Council of Economic Advisers. “On top of that, they’re also explicit that they’re coming for Social Security and Medicare, making this a terribly destructive agenda that starts by fighting the Fed and moves on to devastating vulnerable seniors.”Conservative economists say the inflation impact of extending Mr. Trump’s tax cuts could be much smaller, because those extensions could lead businesses to invest more, people to work more and growth to increase across the economy. They also say Republicans could help relieve price pressures, particularly for electricity and gasoline, by following through on their proposals to reduce federal regulations governing new energy development.“Those things are going to be positive for investment, job creation and capacity” in the economy, said Donald Schneider, a former chief economist for Republicans on the House Ways and Means Committee and the deputy head of U.S. policy at Piper Sandler.A budget proposal unveiled this year by the Republican Study Committee, a conservative policy group within the House Republican conference, included plans to permanently extend the Trump tax cuts and to impose work requirements on federal benefits programs, in hopes of reducing federal spending on the programs and increasing the number of workers in the economy.“We know for a fact that federal spending continues to keep inflation high, which is why a top priority in next year’s Republican majority will be to root out waste, fraud and abuse of taxpayer money,” Representative Kevin Hern, Republican of Oklahoma, said in a statement. Mr. Hern, who helped devise the budget, called it “one of many proposals to address the dire situation we’re in.”As they eye the majority, top Republicans have suggested that they will consider an economically risky strategy to potentially force Mr. Biden to agree to spending cuts, including for safety-net programs. Representative Kevin McCarthy of California, who is the minority leader and is seen as the clear pick to be speaker should Republicans win control of the House, suggested to Punchbowl News this month that he would be open to withholding Republican votes to raise the federal borrowing limit unless Mr. Biden and Democrats agreed to policy changes that curb spending.How to use that leverage has divided Republicans. Some, like Representative Nancy Mace of South Carolina, who fended off a Trump-backed primary challenger, are supportive of that option.But other Republicans — particularly candidates laboring to present a more centrist platform in swing districts held by Democrats — have shied away from openly supporting cuts to safety-net programs.“Absolutely not,” Lori Chavez-DeRemer, a Republican and former mayor running in Oregon’s Fifth Congressional District, said when asked if she would support cuts to Medicare and Social Security as a way to rein in federal spending. “Cutting those programs is not where I, as a Republican, see myself. I want to make sure that we can fill those coffers.” More

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    IRS Releases Inflation-Adjusted Tax Rates for 2023

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    Filers whose salaries have not kept pace with inflation could see savings on their federal income tax bills.WASHINGTON — The rapidly rising cost of food, energy and other daily staples could allow many Americans to reduce their tax bills next year, the I.R.S. confirmed on Tuesday.Tax rates are adjusted for inflation, which in typical times means incremental movements in the thresholds for what income is taxed at what rate. But after a year that brought America’s fastest price growth in four decades, the shift in rates is far more notable: an increase of about 7 percent.Other parts of the tax code will also be affected by the inflation adjustment. Those include the standard deduction Americans can claim on their tax returns.The shift would be slightly larger if not for a change Republicans made as part of President Donald J. Trump’s tax overhaul that was passed in 2017. It tied rates to a measure of inflation, called the chained Consumer Price Index, that typically rises more slowly than the standard Consumer Price Index. In September, chained C.P.I. was up about a quarter of a percentage point less, compared with the previous year, than standard C.P.I.In dollar figures, the shift will be largest at the highest end of the income spectrum, although all seven income brackets will adjust for inflation. The top income tax rate of 37 percent will apply next year to individuals earning $578,125 — or $693,750 for married couples who file joint returns. That is up from $539,900 for individuals this year. The difference: Nearly $40,000 worth of individual income is eligible to be taxed next year at a lower rate of 35 percent.Inflation F.A.Q.Card 1 of 5What is inflation? More