WASHINGTON — On Tuesday, President Joe Biden proposed new taxes on the wealthy to help pay for Medicare. He claimed the proposal would help to extend the insurance program's solvency by 25 years and offer some stability to millions of senior citizens.

Biden explicitly states in his plan that higher taxes on the wealthy are necessary. In essence, he would be asking those who have done the best economically to subsidize the rest of the population by linking these new taxes directly to the well-liked health insurance program for those over 65.

Including salaries and capital gains, Biden wants to raise the Medicare tax rate from 3.8% to 5% on incomes over $400,000 annually. The White House did not include specific cost-saving estimates with the proposal, but earlier projections made in February by the Tax Policy Center indicated that the action would likely raise tax revenues by more than $117 billion over ten years.

In an article published in The New York Times on Tuesday, Vice President Joe Biden said that the modest increase in Medicare contributions from the wealthiest Americans would help the program remain strong for years to come. A "rock-solid guarantee that Americans have relied on to be there for them when they retire," he said of Medicare.

Vice President Biden's budget proposal to lower the cost of Medicare, which is anticipated to keep rising as the U.S. population ages, was rejected by Senate Minority Leader Mitch McConnell.

The modifications proposed by Biden are a part of a more comprehensive budget proposal that he intends to present on Thursday in Philadelphia.

Given that Republicans currently hold control of the House and that Democrats only have a narrow majority in the Senate, getting the proposal through Congress will probably be challenging. By 2028, the Medicare fund may only be able to cover 90% of benefits without cuts or tax increases.

The proposal is a direct rebuttal to Republican lawmakers who maintain that tax cuts like those pushed through by former President Donald Trump in 2017 are what spur economic growth.

The president's plan, according to Grover Norquist, president of Americans for Tax Reform, would hurt the American economy because it would increase the cost of goods and services for everyone and reduce the competitiveness of American workers and businesses abroad versus China.

The divergent viewpoints on how taxes would affect the economy are a part of a larger conflict between Biden and Congress, as they must come to an agreement to increase the government's borrowing limit this summer in order to avoid a default.

But Maya MacGuineas, president of the Committee for a Responsible Federal Budget, applauded the plan despite having some reservations about it. According to MacGuineas, a fiscal watchdog specializing in deficit reduction, the president's plan would bring in hundreds of billions of dollars, possibly even close to a trillion dollars, to strengthen Medicare.

" The independent, nonpartisan Congressional Budget Office will analyze the proposal later this year. Since wealthy Americans already pay higher premiums for Medicare coverage, there is some risk in taxing them more for the program, according to William Arnone, CEO of the National Academy of Social Insurance.

“At some point, higher-income Medicare enrollees may say: `This isn't a good deal for me anymore, The genius of social insurance is that we all pay in, and we all get something out in return. If higher-income people start to question the equity – that could lead to a loss of confidence in the program" Arnone said.

Democrats have stepped up their talk about Medicare ahead of the anticipated budget fight and the 2024 election cycle, pledging to fight off any Republican attempts to cut the program, even though the GOP has so far vowed to avoid any cuts. Even so, Republican lawmakers have been unable to agree on how to carry out their campaign pledge to put the country on a path toward budget parity within the next ten years.

The House Republican Study Committee last year suggested raising the Medicare eligibility age to 67, which would be the same as Social Security. Republicans have denied having any intentions of reducing the program.

A proposal from Sen. Rick Scott, R-Fla., that would require Congress to reconsider all federal laws every five years, including Medicare, has gotten little traction.

The nonpartisan Senior Citizens League's Mary Johnson, a policy analyst who has studied the issue, said that while raising the eligibility age for Medicare is widely unpopular, raising taxes on people who earn more than $250,000 to pay for Medicare has broad support among older Americans.

You might end up losing your job as well, she warned. Senior citizens participate in elections at a very high percentage. The White House refers to these as "loopholes" that let people avoid paying Medicare taxes on some income, and this is another goal of Biden's plan. In addition to tax increases, Biden wants to increase Medicare's ability to bargain for lower drug prices, which was introduced by the Inflation Reduction Act.

The Inflation Reduction Act's pharmaceutical drug provisions would be expanded, according to the White House's budget proposal.
When combined, Biden's new ideas would support a crucial trust fund that funds Medicare, which provides healthcare for senior citizens.

The White House estimates that the changes would keep the fund solvent for about 25 years longer than what is currently anticipated, or until the 2050s. Medicare benefits would also be altered.
Biden wants to cap cost sharing at $2 for some generic medications.