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Biden’s Economic Plan, Explained
In recent weeks, Biden has unveiled a series of proposals to restart the stalled U.S. economy, which has seen a sharp downturn due mainly to the COVID-19 pandemic. More than 30 million people in the United States were collecting unemployment benefits as of the first week of July. The economy added nearly five million jobs in June, but that progress may be short-lived due to the recent surge in COVID-19 cases across the country.
Reigning in the pandemic is one aspect of Biden and Harris’s “Build Back Better” jobs and economic recovery plan for working families. The thinking goes: recovery isn’t possible if the shovel that put us in this hole is allowed to keep digging. Biden has outlined a multi-faceted strategy that focuses on producing and buying American made products, overhauling the nation’s infrastructure and making significant investments in the “caregiving economy.”
Biden’s “Build Back Better” economic plan
According to Biden, “it’s not sufficient to build back, we have to build back better.” At its core, Biden’s agenda is “Buy American,” but he goes about it in different ways. The plan calls for $300 billion to be spent on research and development in various sectors, including biotech, clean energy and artificial intelligence.
Biden would also institute a 100-day supply chain review to get federal agencies to buy goods manufactured in the United States to increase federal spending on these products by $400 billion. To help pay for his plan, Biden would boost the corporate tax rate to 28%. In 2017, Congress passed, and President Trump signed into law the Tax Cuts and Jobs Act, which included a provision that lowered the corporate tax rate from 35% to 21%.
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“Biden only plans on increasing corporate taxes to about 80% of their previous level,” says Ryan Cullen, Chief Executive Officer and Investment Advisor at Cullen Investment Group. “This would increase government revenue by $3.8 trillion over the next decade, which is good because his program’s implementation could cost almost $6 trillion according to some estimates. But while that seems like a lot, it is estimated that for each dollar of input by the government, they will get $1.14 in output, which only comes out to about a $220 billion deficit each year over the next decade.”
What about the COVID-19 recession?
The pandemic has tested the U.S. social safety net and has found more than one weakness. Perhaps the biggest comes in the area of child care. Parents around the country have struggled to find a work-life balance because work and life are happening in the same place. Trying to work from home while taking care of a child is difficult, if not impossible. Add to that the rising costs of child care and you have a slow-rolling crisis that is picking up speed.
Biden comes at this issue from different angles that include tax credits and subsidies. The plan is estimated to cost $775 billion over 10 years. Funding for the various programs would come from repealing tax breaks for real estate investors who earn more than $400,000 and closing loopholes for high-income earners.
Biden wants to provide $8,000 in tax credits for families with one child and $16,000 in credits for those with two or more children. These credits are capped at $125,000. Partial credits will go to families who make more than this, but less than $400,000 a year. Biden’s plan also pushes for free pre-kindergarten to be made available to all 3- and 4-year-olds in the United States. Businesses will be incentivized to build child care facilities at existing workplaces through tax credits.
The $775 billion price tag isn’t just for issues related to child care. Biden also wants to fund the hiring of 150,000 community health care workers. His proposal also includes tax and Social Security credits for unpaid care givers looking after family members.
What about climate change and infrastructure?
The headlines of late have primarily focused on the pandemic and the push for social reforms. Stories about climate change may be less frequent, but that doesn’t mean the issues associated with it are going away. Biden’s $2 trillion proposal for tackling climate change is ambitious and calls for an emissions-free energy sector by 2035.
Biden also wants to spend money to help four million homes and businesses become more energy-efficient. Additionally, his plan calls for increased funding and tax incentives to develop carbon capture technology. Getting away from coal and oil means building and installing more solar panels and wind turbines, which Biden supports.
Biden’s proposal also includes a social justice element. Marginalized communities are set to receive significant investments in clean energy and other infrastructure projects under the Biden plan. Biden himself has proposed to set aside 40% of all benefits for these areas.
Too long, didn’t read?
Biden’s proposals address our current crisis but have a larger scope that includes addressing climate change, racial inequality and child care costs. His “Build Back Better” agenda emphasizes buying American made products and changing how federal agencies spend money to prioritize goods made in the United States. The former vice president would achieve his goals by raising the corporate tax rate, closing loopholes and extending tax credits to individuals and companies.
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Last updated August 14, 2020 — A previous version of this story incorrectly stated that 30 million Americans were currently receiving unemployment benefits, but that statistic only covers the first week of July 2020. By the end of July, the unemployment rate had dropped 0.9 percentage points, to 10.2%.
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