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. He'll also have to deal with the rising costs of battling the coronavirus pandemic and the economic damage it has caused. Here are the details on his COVID-19 stimulus plan and larger policy goals.
Watch for further developments now that President Biden has been sworn in and the 117th Congress, which opened on Jan. 3, gets down to work—especially as Vice President Kamala Harris serves as president of the Senate and the Democratic party gains control of both houses of Congress.
Joe Biden's Economic Policy: Top Line Agenda
- Provide health insurance coverage for 97% of Americans in 10 years.
- 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.
- 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 January 15, 2020. "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," he said in his speech in Wilmington, Delaware. He referred to what many economists are calling a K-shaped recovery, adding that "the wealth of the top 1% has grown by roughly $1.5 trillion since the end of last year—four times the amount for the entire bottom 50%."
Funding the assault on the virus, 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, he wants to reopen most schools and have 100 million vaccine doses administered.
In the coming weeks, he will announce a separate economic recovery plan, which will include investments in infrastructure, manufacturing, and other spendings unrelated to COVID-19 to "create millions of additional good-paying jobs, combat the climate crisis, and build back better than before."
The American Rescue Plan doesn'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 like Bernie Sanders.
The main elements of the American Rescue Plan are as follows:
- Direct aid ($1 trillion): $1,400 per-person checks to supplement the $600 checks going out now. Extending emergency unemployment insurance and eviction moratoriums through September 2021 and raising the former to $400/week. Notably, he is asking Congress for automatic economic triggers so that people don't bear the brunt of legislative delays. $25 billion in rental assistance and $5 billion to cover home energy and water costs. $5 billion in emergency assistance for the homeless. Child care and food program funding. Expanding child care tax credit for one year. Raising the federal minimum wage, which has been at $7.25 an hour since 2009, to $15 an hour.
- Public health effort and reopening schools ($400 billion): A $20 billion national vaccination program, $50 billion "massive" expansion of testing, hiring 100,000 more public health workers, $30 billion into the Disaster Relief Fund for PPE, etc. $130 billion to open most schools by spring. He also wants OSHA to issue rules that protect all workers.
- Support local communities ($440 billion): Help for governments dealing with revenue shortfall to keep front line public workers on the job. Small business grants and loans. $20 billion for public transit agencies.
- Beefing up cybersecurity ($10 billion): In the wake of the SolarWinds hack which affected federal agencies, Biden wants to modernize and secure federal information technology.
Official data from the United States Census Bureau indicates that the uninsured rate at the time of interview in 2019 was 9.2% vs. 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 has promised to protect and build on the ACA. Although he wants to ensure healthcare as 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 Sept. 12, 2020, debate that Medicare-for-all would cost more than $30 trillion over 10 years.
Biden says his healthcare proposal will expand Obamacare so that 97% of Americans are insured and will cost $750 billion over 10 years. He wants to introduce a public health insurance option like Medicare that 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, and restore federal funding for Planned Parenthood.
On April 9, 2020, Biden announced he will fight for lowering the Medicare eligibility to 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. The additional cost he said will be "financed out of general revenues to protect the Medicare Trust Fund."
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 wants to make:
- 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 stepped-up-in-basis loophole
- Raise the top corporate income tax rate to 28% from 21%
- Impose a 15% minimum tax on book income of large companies (at least $100 million annual net income)
- Tax profits earned from foreign subsidiaries of U.S. firms at 21%
President Biden wants to forgive all undergraduate tuition-related federal student debt for those who earn up to $125,000 and attended two- and four-year public colleges and universities. He says he will fund this by repealing the high-income "excess business losses" tax cut in the CARES Act. "That tax cut overwhelmingly benefits the richest Americans and is unnecessary for addressing the current COVID-19 economic relief efforts," h said.
He has 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 monthly payments and interest of those earning less than $25,000 per year and capping payments at 5% of discretionary income for the rest, and additional federal loan forgiveness of up to $50,000 over five years for those who participate in public service.
He also wants to make public colleges and universities free for all families whose income is below $125,000. Biden has "fully endorsed and adopted" Sen. Elizabeth Warren's plan to change the personal bankruptcy laws he helped shape. Titled "Fixing Our Bankruptcy System to Give People a Second Chance," it makes student loans dischargeable. The proposal is to streamline and simplify the process of filing for bankruptcy to make it cheaper and more flexible.
Biden supports raising the federal minimum wage to $15. 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 in order 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 involves 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.
"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 "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. 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," he said at Brookings. "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."
He wants to spend $1.3 trillion on infrastructure over a decade. This includes $50 billion in his first year in office on repairing roads, highways, and bridges, $20 billion on rural broadband infrastructure, $400 billion over 10 years on a federal new 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.
The president's website says he supports the idea of a Green New Deal, that he will rejoin the Paris agreement, and that he wants 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 wants to establish a new Environmental and Climate Justice Division within the Justice Department. In order to build a 100% clean energy economy and create millions of "good union jobs," he plans to make investments in new infrastructure, public transit, clean electricity, the electric vehicle industry, buildings and housing, and agriculture.
In all, his climate plan will require federal spending of $2 trillion over his first term. He doesn't want a ban on fracking but will ban new permits for oil and gas drilling on federal land and offshore, plug abandoned oil and natural gas wells, and restore and reclaim former mining sites.
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 spending 10% of federal program 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. "This country wasn’t built by Wall Street bankers and CEOs and hedge fund managers. It was built by the 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 advanced economies, and the income disparity between groups in the middle class is growing, according to Pew. Moreover, while 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.