President Joe Biden campaigned on an economic platform to shore up the middle class, extend healthcare, raise taxes on the wealthy, and invest trillions of dollars in green energy infrastructure, among other issues.
On March 11, 2021, Biden won his first major economic victory when he signed the American Rescue Plan Act of 2021 into law. It's one part of his Build Back Better Plan, which also includes the American Jobs Plan and the American Families Plan. Although neither of those passed Congress, parts of them were wrapped into the Inflation Reduction Act, passed in August 2022.
But the president and his administration are dealing with high inflation, resulting from the pandemic and the war in Ukraine. Inflation has come down from its record high in 2022 due to interest rate hikes from the Federal Reserve, but high prices for goods and services are still hurting the country. Here are the details of his policy goals.
- Provide COVID-19 relief, which he did through the $1.9 trillion American Rescue Plan, the first leg of Biden's economic plan.
- Build on the Affordable Care Act and provide health insurance coverage for 97% of Americans.
- Raise an additional $4 trillion in tax revenue by increasing the top tax rate to 39.6%, taxing capital gains at ordinary rates, and raising the corporate tax rate to 28%.
- Forgive student loan debt and make college free for those making up to $125,000.
- Raise the minimum wage to $15 an hour and repeal "right to work" laws.
- Expand "Buy American" policies through government purchasing while using subsidies, federal matching, and incentives to make American products more competitive.
- Invest $1.3 trillion in infrastructure over 10 years, which resulted in the $1.2 trillion Infrastructure Investment and Jobs act.
- Spend $2 trillion on clean energy during his first term as president.
The American Rescue Plan
President Joe Biden formally announced his $1.9 trillion COVID-19 stimulus plan on Jan. 14, 2021. On March 11, 2021, he made it a reality. Biden signed the $1.9 trillion piece of legislation passed by Congress just days before, promising $1,400 stimulus checks, extended unemployment benefits, a vaccine rollout, and more—all as part of the promises he made in Wilmington, Delaware, in January 2021.
"There is real pain overwhelming the real economy. You won’t see this pain if your scorecard is how things are going on Wall Street," Biden said in his speech. He referred to what many economists are calling a K-shaped recovery, adding that "the wealth of the top 1% of the nation has grown roughly $1.5 trillion since the end of last year—four times the amount for the entire bottom 50%."
Funding the assault on the coronavirus, strengthening the social safety net for those pushed to the brink, and helping state and local governments are the main goals of the American Rescue Plan. In the first 100 days of his administration, his goal was to reopen most schools and have 100 million vaccine doses administered.
The American Rescue Plan didn't mention tax increases, which means the federal government will pay for it with debt. The president has spoken strongly against deficit worries during the pandemic, earning praise from progressives in his party, such as Sen. Bernie Sanders.
We've highlighted some of the key elements of the American Rescue Plan below.
This portion of the plan, worth $1 trillion, included $1,400 checks sent to individuals with adjusted gross incomes of less than $75,000 (if single or married filing separately), $150,000 (if married filing jointly), or $112,500 (for heads of household). These checks were meant to supplement the $600 checks that were previously mailed out.
Additional funding provided for eviction and foreclosure moratoriums expired on July 31, 2021. The plan included $21.5 billion in emergency rent, almost $10 billion in mortgage assistance, and $5 billion in emergency assistance for people experiencing homelessness.
While the moratorium on evictions and foreclosures has expired, there is still help with rental and mortgage payments available. The Consolidated Appropriations Act, 2021, passed in December 2020, provided $25 billion to the U.S. Treasury Emergency Rental Assistance program, which is still being distributed to those in need.
The National Low Income Housing Coalition provides a searchable list of all the housing relief programs available on its website. Some states have instituted moratoriums of their own. Consult the Consumer Financial Protection Bureau's list of rent relief programs to know your options.
Child care and food program funding along with an expansion of the child care tax credit for one year were also part of the program. Despite a request from Biden, automatic economic triggers were not part of the legislation nor is a plan to raise the federal minimum wage to $15 an hour.
Public Health Efforts and Reopening Schools
This section included:
- A $20 billion national vaccination program
- A $50 billion "massive" expansion of testing
- The hiring of 100,000 more public health workers
- $30 billion for the Disaster Relief Fund for personal protective equipment
- $130 billion to open most schools.
The total cost? $400 billion.
Biden also issued an executive order, partnering with the Occupational Safety and Health Administration (OSHA) to issue rules to protect all workers.
Support Local Communities
This $400 billion section of the plan aimed to provide help for governments dealing with revenue shortfalls to keep front-line public workers on the job, small business grants and loans, and $20 billion for public transit agencies.
Beefing up Cybersecurity
In the wake of the SolarWinds hack, which affected federal agencies, Biden wanted $9 billion to modernize and secure federal information technology. Congress approved almost $2 billion.
Official data from the United States Census Bureau indicates that the uninsured rate in 2019 was 9.2% versus an uninsured rate of 8.9% in 2018. Between 2018 and 2019, the number of people without health coverage decreased in one state but increased in 19 states. Overall, the number of people with no health insurance for the entire year was lower at 8% in 2019, compared to 8.5% in 2018.
Biden railed against the Trump administration's countless attacks on the Affordable Care Act. As president, he promised to protect and build on the ACA. Although he wants to ensure healthcare is a right and not a privilege, he does not support Medicare-for-all or eliminating private insurance because it would mean getting rid of Obamacare and starting over on political negotiations. He also argued during the Oct. 15, 2019, presidential debate that Medicare-for-all would cost more than $30 trillion over 10 years.
According to Biden, his healthcare proposal will expand Obamacare so that more than 97% of Americans are insured, and will cost $750 billion over 10 years. His goal is to introduce a public health insurance option like Medicare, which will be available premium-free to individuals in states that haven't expanded Medicaid and to people making below 138% of the federal poverty level.
He also wants to eliminate the 400% federal poverty level income cap for tax credit eligibility and lower employees' maximum contribution for coverage to 8.5%. In addition to this, he promises to:
- Bar healthcare providers from “surprise billing” patients with out-of-network rates
- Address market concentration in the industry
- Allow Medicare to negotiate lower prices with drug manufacturers
- Establish an independent review board that will recommend a reasonable price for drugs with no competition
- Penalize drug price increases over the inflation rate
- End the tax deduction for all prescription drug ads
- Support the development of generics
- Restore federal funding for Planned Parenthood
On April 9, 2020, Biden promised to fight for lowering the Medicare eligibility age to 60 from 65. "It reflects the reality that, even after the current crisis ends, older Americans are likely to find it difficult to secure jobs," he said in a Medium post discussing the soaring unemployment caused by COVID-19 and measures needed to help those affected. He also said that the additional cost will be "financed out of general revenues to protect the Medicare Trust Fund."
Biden also opened up the enrollment period for HealthCare.gov from Feb. 15 to Aug. 15, 2021. Several provisions in the American Rescue Plan made it (at least temporarily) less expensive to receive health coverage through the Health Insurance Marketplace. For example, the government paid the entire COBRA premium from April 1 through Sept. 30, 2021, for people who lost a job or had their hours cut.
President Biden wants a pro-growth, progressive tax code. His plan is expected to raise nearly $4 trillion in additional revenue over a decade. According to the Tax Policy Center, "The highest-income 20% of households (who make about $170,000 or more) would bear nearly 93% of the burden of Biden’s proposed tax increase, and the top 1% nearly three-quarters."
Here's a list of changes he campaigned on making:
- Raise the top income tax rate back to 39.6% from 37%
- Tax capital gains and dividends at ordinary rates for those with annual incomes over $1 million
- Tax unrealized capital gains at death
- Apply Social Security payroll tax for those earning over $400,000 a year
- Close the step-up-in-basis loophole
- Raise the top corporate income tax rate to 28% from 21%
- Impose a 15% minimum tax on the book income of large companies (at least $100 million annual net income)
- Tax profits earned from foreign subsidiaries of U.S. firms at 21%
During his campaign in the presidential election, President Biden wanted to make tuition free for those who earn up to $125,000 and attend two- and four-year public colleges and universities. He planned to fund this by repealing the high-income "excess business losses" tax cut in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. "That tax cut overwhelmingly benefits the richest Americans and is unnecessary for addressing the current COVID-19 economic relief efforts," he said.
He also had several other federal student debt proposals, including:
- Immediately canceling a minimum of $10,000 of student debt per person
- Forgiving the remainder of loans after 20 years with no tax burden
- Suspending the monthly payments and interest of those earning less than $25,000 per year and capping payments at 5% of discretionary income for the rest
- Additional federal loan forgiveness of up to $50,000 over five years for those who participate in public service
- Making public colleges and universities free for all families whose income is below $125,000.
Biden fully endorsed and adopted Sen. Elizabeth Warren's plan to change the personal bankruptcy laws he helped shape, which makes student loans dischargeable. The proposal is to streamline and simplify the process of filing for bankruptcy to make it cheaper and more flexible.
Student Loan Forbearance and Forgiveness
In March 2020, the Department of Education paused payments for federal student loans in response to the economic fallout of the pandemic. All interest, repayment, and collections on federal student loans were suspended. The Biden administration extended the payment pause multiple times before a 2023 timeline for ending the program was announced in November 2022.
The Biden administration enacted the American Rescue Plan, which aimed to tackle challenges faced during and because of the COVID-19 pandemic. Among the highlights was a provision that makes all student loan forgiveness from Jan. 1, 2021, to Dec. 31, 2025 completely tax-free.
Biden also announced a plan in August 2022 that called for forgiving up to $20,000 in student loan debt for borrowers whose income is less than $125,000 and who were Pell Grant recipients. For those who were not Pell Grant recipients, the cancellation amount is up to $10,000.
In addition, he promised:
- A new income-driven repayment plan that halves monthly payments for undergraduate loans
- Fixes to the Public Service Loan Forgiveness (PSLF) program to help certain borrowers, such as government workers and those in the military, qualify more easily for loan forgiveness
- To work with colleges to keep the cost of higher education down.
But federal courts issued orders blocking the student loan forgiveness plan. Consequently, as of Nov. 11, 2022, the Department of Education stopped accepting applications for student loan forgiveness.
While waiting for the court challenges to the loan forgiveness program be resolved, the department announced that the forbearance program will end on the earlier of these two dates:
- 60 days after the department is permitted to implement Biden's loan forgiveness program or the litigation is resolved; or
- 60 days after June 30, 2023.
Biden said he's committed to raising the federal minimum wage to $15 and eliminating "right to work" laws. He also wants to give workers more bargaining power by getting rid of "abusive" non-compete clauses, removing rules in contracts that prevent employees from discussing pay with each other, and stopping companies from classifying low-wage workers as managers to avoid paying them overtime.
He wants international trade rules that "protect our workers, safeguard the environment, uphold labor standards and middle-class wages, foster innovation, and take on big global challenges like corporate concentration, corruption, and climate change."
Made in All of America
In July 2020, Biden proposed a $700 billion plan to boost America's manufacturing and technological strength. This involved government spending of $400 billion on U.S. goods and services and a $300 billion investment in research and development (R&D) on technologies like electric vehicles, lightweight materials, 5G, and artificial intelligence (AI).
"Biden believes that American workers can out-compete anyone, but their government needs to fight for them," says his website. "Biden does not accept the defeatist view that the forces of automation and globalization render us helpless to retain well-paid union jobs and create more of them here in America. He does not buy for one second that the vitality of U.S. manufacturing is a thing of the past."
Infrastructure and Climate Change
As vice president, Biden once called New York's LaGuardia Airport "a third-world airport" in a speech about infrastructure in the U.S.
"Look, we need roads, we need waterways, we need ports to move our products," he said at Brookings, adding:
We need highways and transit to get workers to and from work. We need lightning-fast broadband to communicate. It’s not a luxury. It’s an absolute necessity to compete with the rest of the world. We need a massive investment in infrastructure: roads, bridges, airports, broadband. We’ve been lagging for too many years now, and we can afford it.
His goal was to spend $1.3 trillion on infrastructure over a decade. This plan included $50 billion in his first year in office for repairing roads, highways, and bridges, $20 billion for rural broadband infrastructure, $400 billion over 10 years for a new federal agency to conduct clean-energy research and innovation, $5 billion over five years on electric car battery technology, and $10 billion over 10 years on transit projects that serve high-poverty areas.
He was able to get a start on some of those goals with the implementation of the $1.2 billion Infrastructure Investment and Jobs Act, which provided $550 billion for rebuilding roads and bridges, improving public transit, replacing lead pipes and addressing drinking water contamination, expanding access to high-speed internet, and more. The rest of the money would come from renewed appropriations for routine federal infrastructure spending.
The president's website said he supported the idea of a Green New Deal and that he wanted to ensure the U.S. has a carbon-pollution-free power sector by 2035 and reaches net-zero emissions no later than 2050. He also promised to rejoin the Paris Agreement, which he did in January 2021.
He also wanted to establish a new Environmental and Climate Justice Division within the Justice Department. To build a 100% clean energy economy and create millions of "good union jobs," Biden's plan was to make investments in new infrastructure, public transit, clean electricity, the electric vehicle industry, buildings and housing, and agriculture.
In all, his climate plan was estimated to cost $2 trillion over his first term.
Biden wants to help rural communities, which make up 20% of the U.S. population, by fighting for fair trade deals, investing $20 billion in rural broadband infrastructure, creating low-carbon manufacturing jobs, reinvesting in agricultural research, improving access to federal resources and funds for farming or small businesses, expanding health services and medical training programs, and providing funding in areas with persistent poverty.
The American Middle Class
Revitalizing the middle class and making it more racially inclusive was the cornerstone of Biden's campaign. "The country wasn’t built by Wall Street bankers, CEOs, and hedge fund managers. It was built by the great American middle class," he said at a rally kicking off his campaign.
Although this sounds like something Sen. Bernie Sanders would say, Biden casts himself as a moderate with sensible, achievable plans rather than the leader of "a revolution" against economic inequality. "I don’t think 500 billionaires are the reason why we’re in trouble," he said in a speech at a Brookings Institution event in 2018. "The folks at the top aren’t bad guys."
But he does believe a growing and thriving middle class, which he likes to think of more in terms of values and lifestyle rather than an income group, is important for social and political stability in the U.S. He blames the lack of opportunities and optimism in the country for "phony populism" and "a younger generation that’s questioning the very essence of our capitalist system."
According to Pew Research, 52% of American adults lived in middle-income households in 2018. These are adults whose annual household income is two-thirds to double the national median after incomes have been adjusted for household size. The annual income range for a middle-class household of three in 2018 was $48,500 to $145,500.
The U.S. has a proportionally smaller middle class than many other advanced economies, and the income disparity between groups in the middle class is growing, according to Pew. Moreover, though the top 20% have fully recovered from the Great Recession, the middle class has not yet reached its previous peak in 2007, according to Brookings experts.
"Folks in the middle class are in trouble. It’s not just their perception. They are in trouble," said Biden.
Who Will Benefit From Biden's Student Loan Forgiveness Plan?
Borrowers earning less than $125,000 will benefit from Biden's student loan forgiveness plan. If you earned less than $125,000 and were a Pell Grant recipient, you are eligible for debt cancellation of up to $20,000. If you earned less than $125,000 and were not a Pell Grant recipient, you are eligible for debt cancellation of up to $10,000. This program is blocked in the courts.
How Is the Biden Administration Stimulating the Market for Electric Cars?
To stimulate the market for electric cars, Biden's Bipartisan Infrastructure Law (aka, the Infrastructure Investment and Jobs Act) invests $7.5 billion to build a national network of 500,000 electric vehicle chargers, with the goal of making charging predictable, reliable, and easy. The plan also provides for more than $7 billion so that domestic manufacturers have access to the materials and minerals to create batteries.
Are Biden's Policies Helping Medicare?
Biden is helping Medicare through the Inflation Reduction Act by lowering premiums for Medicare Advantage and Medicare Part D prescription drug plans in 2023.
The Bottom Line
As an incoming President, Biden faced many challenges, such as the ongoing COVID pandemic, issues arising from the pandemic, and high levels of inflation, to name but a few. His economic plan has aimed to address all of these issues, as well as other areas to improve the lives of those living in the country.