The President’s FY 2024 Budget lays out President Biden’s plan to invest in America, lower costs for families, protect and strengthen Social Security and Medicare, and reduce the deficit.
Alongside major reforms to the individual and corporate tax codes to ensure that the wealthy and big corporations pay their fair share, the Budget cuts wasteful spending on Big Pharma, Big Oil, and other special interests, cracks down on systemic fraud and identity theft, and makes programs more efficient and cost-effective—saving taxpayers hundreds of billions of dollars.
Congressional Republicans have so far rejected this approach to reducing the debt, just as they have rejected reducing the debt by asking the wealthy and big corporations to pay their fair share in taxes. In fact, Republicans have run ads opposing the reforms President Biden signed that will cut federal Medicare spending and lower prescription drug costs for seniors. Meanwhile, Republican members of Congress continue to propose cuts to Social Security, Medicare, Medicaid, the Affordable Care Act, and other programs critical to seniors and middle-class and working families.
President Biden will always reject cuts that take away people’s health care; raise costs for seniors, middle-class families, and students; increase poverty; or reverse our economic progress. But—as his Budget shows—he stands ready to work with members of both parties to cut wasteful spending on special interests and crack down on systemic fraud.
Cutting Wasteful Spending on Big Pharma
Building on the prescription drug reforms in the Inflation Reduction Act (IRA), the Budget will:
- Expand Medicare’s Ability to Negotiate Drug Prices. The IRA finally gave Medicare the power to negotiate with drug companies on the high prices they charge for prescription drugs, and the Budget builds on that progress. The Budget cuts Federal spending by $160 billion: increasing the number of drugs Medicare can select for negotiation and bringing more drugs into the negotiation process sooner. (All estimates are for savings over 10 years.) These reforms will not only cut costs for the Federal government; they will also save billions of dollars for seniors.
- Expand the IRA’s Requirement that Drug Companies Pay Rebates When They Increase Prices Faster than Inflation. Thanks to the IRA, drug manufacturers must now pay rebates to Medicare if their price increases for certain drugs exceed inflation. The Budget builds on the IRA by requiring rebates for commercial drug sales, as well as sales to Medicare. That will save the federal government $40 billion, further curb prescription drug price inflation, and reduce health insurance premiums for people with private health insurance coverage.
- Strengthen the Medicaid Drug Rebate Program. While drug manufacturers are already required to pay rebates to Medicaid, the Budget will give the Department of Health and Human Services the authority to negotiate additional, supplemental Medicaid drug rebates on behalf of states in order to pool and increase purchasing power. In addition, the Budget will extend existing Medicaid drug rebate requirements to states that operate their Children’s Health Insurance Programs separately from Medicaid. These actions will reduce federal spending by almost $8 billion, help lower prescription drug spending, and ensure that both states and the federal government are prudent purchasers of prescription drugs.
Cutting Other Wasteful Spending on Special Interests
The Budget proposes to eliminate wasteful corporate subsidies, whether these are delivered through federal programs or through the tax code:
- Eliminate Tax Subsidies for Oil and Gas. The President is committed to ending tens of billions of dollars of federal tax subsidies for oil and gas companies. Even as they benefit from billions of dollars in special tax breaks, oil companies have failed to invest in production. In 2022, they realized record profits and cut their investment as a share of operating cash flows to the lowest levels in decade, while undertaking record stock buybacks that benefited executives and wealthy shareholders. The Budget saves $31 billion by eliminating special tax treatment for oil and gas company investments, as well as other fossil fuel tax preferences.
- Lower Medicaid Spending by Addressing Excessive Payments to Medicaid Managed Care Organizations. The Budget will lower Medicaid costs by over $20 billion by requiring that insurance companies that are charging Medicaid far more than they actually spend on patient care pay back some of the excess. Currently, only about half of states require private insurance companies that provide Medicaid coverage to pay money back when they realize outsize profits. Without this requirement, insurance companies are keeping millions of dollars each year in excessive payments. The Budget would apply this requirement nationwide, consistent with similar requirements in Medicare Advantage and Affordable Care Act plans. With it, insurance companies will no longer be able to charge for unnecessary administrative expenses or sacrifice quality care to increase their profit margins, and if they charge too much, they will have to pay it back to the Medicaid program rather than keeping the profits and, in some cases, making larger payments to shareholders.
- Eliminate Tax Subsidies for Real Estate. The Budget saves $19 billion by closing the “like-kind exchange” loophole, a special tax subsidy for real estate. This loophole lets real estate investors – but not investors in any other asset – put off paying tax on profits from deals indefinitely as long as they keep investing in real estate. This amounts to an indefinite interest free loan from the government. Real estate is the only asset that gets this sweetheart deal.
Cracking Down on Bad Actors, Systemic Fraud, and Identity Theft
The Biden Administration and the oversight community have already made substantial efforts over the last two years to punish and prevent Pandemic fraud – including restoring anti-fraud guardrails, restoring the use of checking Do Not Pay and Tax Transcripts, committing $2 billion of American Rescue Funds to helping states modernize and prevent Unemployment fraud, furthering identity theft prevention, and setting up at the Department of Justice an Interagency Pandemic Fraud Task Force and a Chief Prosecutor with three new Strike Forces.
Building on that progress, the Budget includes significant new proposals to crack down on systemic fraud and identity theft, hold bad actors accountable, and cut or recoup spending stolen by the most sophisticated criminals. Each dollar spent on enforcement and oversight saves well over $10 for the taxpayer and often dramatically more. The Budget will:
- Pursue, Investigate, and Punish Systemic Fraudsters. Past underinvestment in basic government technology and the crush of demand during the pandemic, combined with ill-considered decisions to take down basic fraud controls at the onset of the pandemic led to a historic degree of outright fraud and identity theft of emergency benefits. The Budget will empower law enforcement, investigators, and watchdogs to pursue, investigate, punish, and recover money from those who were engaged in the most major or sophisticated frauds — from well-off individuals who took hundreds of thousands, if not millions, from taxpayers to sophisticated criminal syndicates engaging in systemic identity theft. This includes extending the statute of limitations for serious instances of fraud, increasing funding to triple the number of COVID-19 Fraud Strike Forces, providing historic funding to Inspectors General in agencies hit the hardest by Pandemic fraud who are savings billions already with funds provided by the Administration, and expanding analytic tools to audit and investigate possible fraud. Investigators and watchdogs have already recovered or prevented billions of dollars from being stolen.
- Invest in Fraud Prevention and Stopping Identity Theft. The pandemic exposed significant vulnerabilities in our government benefits systems, especially in regard to preventing systemic identity theft as a means to steal benefits designed for Americans coping with the health and economic impacts of the pandemic. The Budget proposes significant resources to support stronger preventative steps to prevent identity theft in public benefits, including funding to establish a permanent antifraud data and analytics capability analogous to the Pandemic Response Accountability Committee’s (PRAC) Pandemic Analytics Center of Excellence, expanding Treasury’s Do Not Pay Service and increasing checking of tax transcripts, and significant investments in Inspectors General to ensure lessons learned are applied going forward.
- Combat Identity Theft and Other Unemployment Insurance (UI) Fraud. The Biden Administration changed the previous Administration’s policy in order to allow the oversight community quick access to all state information necessary to stop billions in rampant multi-state Unemployment Insurance Fraud in the unemployment systems run by 53 states and territories. The Administration also enacted $2 billion in the American Rescue Plan to help all 50 states and the territories modernize and prevent future fraud and identity theft. In addition to the many billions of dollars such investments and new policies will save taxpayers over the long-run, the Budget will include new proposals for modernizing, protecting, and strengthening the UI program that will lead to $2 billion in budgetary savings. These provisions will tackle fraud, support more robust identity verification for UI applicants, help states develop and test fraud-prevention tools and strategies, and increase investigations of fraud rings targeting the UI program. For example, these reforms would require States to use the National Directory of New Hires and prisoner datasets to check UI claims and allow states to use 5 percent of recovered fraudulent overpayments for improper payment prevention and recovery. These proposals are designed to provide states with new tools and resources to combat UI fraud and reduce and recoup fraudulent and other improper payments and contrast with congressional Republican proposals that could actually impede and distract from efforts to address systemic fraud.
- Update Civil Monetary Penalties for Labor Law Violations. The Budget will increase monetary penalties for bad actors who fire or retaliate against workers for exercising their right to organize and collectively bargain, steal wages from workers, violate child labor laws, force workers to work in unsafe conditions, or otherwise flagrantly violate our Nation’s labor laws. That will deter employers from violating workers’ rights, leveling the playing field for responsible employers, and ensure those who do violate their rights are held accountable, while also increasing federal government collections by approximately $2.5 billion.
Cutting Wasteful Spending Through the Tax Code
The Budget cuts wasteful spending through the tax code and ends tax loopholes that provide billions of dollars in unwarranted subsidies to high-income people with the ability to exploit them.
- Preventing Wealthy Investment Fund Managers from Avoiding Tax on Their Earnings. The carried interest loophole allows wealthy investment managers to pay a 20 percent rate on the pay they receive for managing fund assets, instead of the 37 percent rate that comparable wage earners pay. This loophole has allowed some investment fund managers to pay lower taxes than many American workers. The Budget would finally close this loophole, saving $6 billion.
- Ending Loopholes that Let Billionaires Exploit Middle-Class Retirement Savings Incentives. Tax breaks for retirement savings are supposed to help middle-class workers put a little aside for the future. But some billionaires have used a loophole in the law to accumulate tens of millions of dollars in tax-favored retirement accounts – far in excess of what’s needed for retirement security – and never taking distributions from those accounts. The Budget limits the amount taxpayers with incomes over $400,000 can hold in tax-favored retirement accounts, along with other safeguards to prevent abuse of these accounts by some of the nation’s wealthiest individuals. These reforms will save $23 billion.
- Eliminate Tax Subsidies for Cryptocurrency Transactions. The Budget saves $24 billion by eliminating a special tax subsidy for crypto currency and certain other transactions. Right now, crypto investors aren’t subject to the same rules of the road that investors in stocks or other securities have to follow, allowing them to report excessive losses. For example, a crypto investor – unlike an investor in stocks or bonds – can sell a cryptocurrency at a loss, take a substantial tax loss to reduce their tax burden, and then buy back that same cryptocurrency the very next day. The Budget eliminates this tax subsidy for crypto currencies by modernizing the tax code’s anti-abuse rules to apply to crypto assets just like they apply to stocks and other securities.
Saving Taxpayer Dollars by Making Programs More Cost Effective
The Budget also proposes reforms to save taxpayer dollars by making programs more efficient and effective at a lower cost to the American people.
- Bipartisan Reforms that Eliminate Unnecessary Spending on Prison Facilities. The Budget proposes to cancel nearly $1 billion in unused Bureau of Prisons (BOP) construction funding that is no longer needed to expand prison capacity. Over the past decade, the Federal prison population has declined by almost 30 percent, and the bipartisan First Step Act (2018), along with Administration initiatives, have and will reduce prison populations further in the coming years, eliminating the need for additional prison capacity.
- Lower Medicaid Spending by Expanding Access to Prevention and Treatment Options for HIV/AIDs and Hepatitis C. The Budget will lower Medicaid costs by $10 billion by improving access to HIV prevention and care programs, including access to pre-exposure prophylaxis (also known as PrEP), among Medicaid beneficiaries. Ensuring access to curative Hep C treatments and to PrEP and other prevention strategies to reduce HIV infections not only improves health outcomes and quality of life for beneficiaries but also saves Medicaid thousands of dollars per patient by eliminating the need for years of costly care associated with on-going treatment. The Budget will also create a subscription model for drugs to treat Hepatitis C, which by 2032 will reduce Medicaid spending by hundreds of millions of dollars each year.
- Extending Spectrum Auctions. The Budget proposes to extend authority for the Federal Communications Commission to auction radio spectrum, which is an important national resource needed for a wide variety of uses including high-speed Internet, satellite communications, radio broadcasting, national security, and public safety. Managing diverse and sometimes competing demands requires planning and coordination. Ensuring the government can make efficient use of this valuable and finite resource will generate over $50 billion in savings.
Official news published at https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/09/fact-sheet-the-presidents-budget-cuts-wasteful-spending-on-big-pharma-big-oil-and-other-special-interests-cracks-down-on-systemic-fraud-and-makes-programs-more-cost-effective/
Remarks by President Biden and Taoiseach Leo Varadkar of Ireland Before Bilateral Meeting
Remarks by President Biden and Taoiseach Leo Varadkar of Ireland at the Annual Friends of Ireland Luncheon
Readout of National Security Advisor Sullivan, Secretary Austin and Chairman Milley Call with Ukrainian Counterparts