The Federal Budget

 February 25, 2025

The Federal Budget by Lynne Weikart

Both Houses of Congress wrestle with passing a Budget Resolution - the financial goals for their budget, and their goals are deep cuts in Medicaid, which is health care for the poor. Congress refuses to discuss revenue; its focus is spending cuts. 

There are two sides to a budget - the revenue side and the spending side. Before cutting spending, why not examine what can be done on the revenue side? Congress avoids discussing revenue because it wishes to extend the Trump tax cuts that expire at the end of 2025. 

In FY2024, we collected $4.92 trillion in revenues. Republicans will not look at the revenues. 

Let’s look at the revenues.

 

The expenditures were $6.752 trillion for a deficit of $1.83 trillion in FY2024. According to the Congressional Budget Office (CBO), permanently extending the expiring Trump tax cuts would cost $4 trillion over the next 10 years or $400 billion per year. That $400 trillion is more than 20% of the deficit. So why not do something simple – Do not extend the tax cuts. 

Another easy fix on the revenue side is to lift the ceiling on social security. Right now, individuals who pay into social security and make more than $176,100 a year, no longer have to pay in. Up to $176,100, no more. If we took off the cap and wealthy people had to pay the same 6.2% of their income as us middle-class folks do, social security would collect an extra $400 billion a year at least. 

Then there are the tax breaks, which total over a trillion dollars, which is more costly than Medicaid or Medicare. Pick your favorites. Can you get $500 billion from that CBO report?

Also, let's tax the wealthy, anyone with over $1 million in income. Increase the income tax rate to 70% again. Although it is difficult to predict, there are a few hundred billion there.

Lastly, I haven't addressed the corporate tax rate.

So, within a few minutes, I have found more than a $1-$2 trillion in extra revenue. Let’s not cut the budget before we examine the revenue side.