Budget Battle: Tax Hikes vs. Defense Cuts

President Biden kicked off the fiscal debate by proposing his formal FY2024 budget request this week. My BD colleague Bill Bolling’s response was typical: high on rhetoric, low on specifics. One day after Biden proposed his budget, the House Freedom Caucus responded with its own far less detailed blueprint (Emily Brooks, The Hill).


As for the budget itself, it included and built on Biden’s Medicare restructuring – as in, higher taxes on “the wealthy.” Biden’s budget also includes roughly $75B a year (on average) in policies that would make it easier for parents to bear and raise children (family leave and child tax credit). Last but not least, Biden increases defense spending from last year and keeps raising it in nominal terms for the rest of the decade.

The House Freedom Caucus (HFC) would “cap overall discretionary spending at fiscal 2022 levels for 10 years while allowing for 1 percent growth per year, which would be a $131 billion cut from current levels.” They also “aim to keep defense spending at current levels.”

In the absence of anything official from the House Budget Committee (and no expectation that we’ll get anything from them this month), these are all we have to compare. I compare them by the following ranked priorities.

  1. Defense Spending
  2. Pro-life Spending
  3. Structural Reforms
  4. Taxes
  5. Everything else

Let’s begin.

Defense Spending

For neoconservatives like myself (yes, I still use the term), Biden’s proposal is acceptable in short term and disappointing in the long term. Biden recognizes that the changes unleashed by Russia’s invasion of Ukraine. His willingness to increase defense spending from last year reflects that. I am concerned, however, that after FY2028 the increases are less than 1% annually. That said, the HFC is more alarming. Ms. Brooks reports that they offered “that defense spending could remain flat.” Even if we’re being generous and assuming it’s the FY2023 figure that would “remain flat,” that would lead to a reduction of $962 billion from Biden’s budget over the next decade.

Pro-life Spending

During the 2020 campaign, I proposed that the candidate more likely to reduce abortions and save children was Joe Biden, not Donald Trump. I based this on pre-Roe abortion figures and data regarding abortion behavior.

 Dr. Wm. Robert Johnston, a researcher at the Global Life Campaign, found that anywhere from 25-40 percent of abortions were economic reasons.

There are plenty of policies that could allay those concerns (paid parental leave, backdating child support to include pre-natal cost, compensating for disruptions to development in career or in education, etc.) while also facing far less political and constitutional resistance. Moreover, addressing the economic concerns of prospective parents could save two to ten times as many pre-born children as reversing Roe would.

Biden’s budget includes funding for family leave and a more robust child tax credit. The HFC mentions neither. The difference is $750 billion to support families bearing and raising children over ten years.

Structural Reforms

The HFC’s refusal to go into detail puts them at a real disadvantage here. Unfortunately, Biden’s budget doesn’t include much either, outside of the aforementioned Medicare restructuring – which has many areas for improvement (such as combating Certificate of Public Need regimes). Neither takes up Mitt Romney‘s ambitious 21st Century welfare reform. In fact, the HFC would make things worse with their push for more “work requirements on welfare programs” – which discourage entrepreneurship and small business formation (as well as likely increase the number of government bureaucrats regulating poor people).


It takes a while, but we do get to an item where the HFC has the higher ground. Biden’s tax hikes are nearly $4T over ten years (and that’s if you score the child tax credit and earned income credit expansions as tax cuts, which I do but other economists do not).

Partially reversing the Trump corporate tax reduction is especially egregious, as the corporate tax cut is just about the only unqualified positive about the 2017 tax reduction. Great Britain’s planned-but-not-implemented rate increase to 25 percent has already started driving away foreign investors (Telegraph). Moreover, income tax increases rarely bring in the revenue that’s projected for them.

I should note that a decade ago – or even half a decade ago – I’d place this at a higher priority than I do now. Events have changed my priorities – in particular the global authoritarianism alliance.

Everything else

While the HFC lacks specifics (or likely because of that), it can propose lower spending and borrowing than Biden’s proposal. The devil is in the details, though, and HFC has none. This is why I placed this at the end. Top-line numbers without detail have a history of melting under scrutiny and changing (upward) over time. In the absence of structural reform or detail, no proposed cuts are worth the bandwidth used to propose them. Moreover, Biden’s proposed budget also includes more funding for border support, including enforcement and processing asylum applications. HFC’s discussion of the border is more vague and provides no specific mention of more funding in either area.


For a fiscal or economic conservative, the HFC offers promises we have heard before but never seen delivered. Meanwhile, on matters of policy, it is Biden – not the HFC – whose proposal would better protect America and democracy abroad while encouraging child-bearing over abortion at home. With luck, Congress can improve on Biden’s budget by paring back the tax increases and bringing in reforms that can lower both spending and government scope.

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