The Daily Finance Guide: What Will Biden Do to Restore the Economy, If Elected?

What Will Biden Do to Restore the Economy, If Elected?

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The Democratic presidential nominee in 2020, former U.S. Vice President Joe Biden presented a plan for combating the COVID pandemic and the recession it’s fueled. He put forth guidelines to overhaul the nation’s embattled health care system.

His plan, which often differs from current policies enacted by President Trump, also targets the global climate crisis, and he’s outlined plans for education, immigration, and housing, as well as taxes, infrastructure, and trade.

Key Takeaways

The Democratic presidential nominee, Joe Biden has prioritized responses to the pandemic, front-line workers’ safety, and recession recovery in his economic proposals.
Biden will make universal health care available to eligible Americans who need it.
Other planned reforms announced by Biden’s campaign include addressing climate change, education, immigration, and infrastructure.
Biden’s plans will need for tax increases for corporations and individuals, especially those with the highest incomes.

Pandemic Response

His proposed policy platform aims to restore the economy in the shorter term by protecting workers from the pandemic. He'd use the Defense Production Act to produce more of the personal protective equipment (PPE) that safeguards essential workers.

His health insurance plans will completely cover COVID-19 testing and vaccines. A prospective Pandemic Testing Board will coordinate the nation’s testing efforts, and a proposed Public Health Jobs Corp would do contact tracing. These are strategies recommended by the Centers for Disease Control and Prevention (CDC) to control the coronavirus.

Many of the actions proposed by Biden need congressional approval before they can be put into action.

Recession Recovery, Jobs Creation

On July 9, 2020, Biden released a list of his “Buy American” plan to create 5 million new jobs.1 The government will spend $400 billion to buy American products and services. An additional $300 billion will go toward research and development, which includes half for clean energy, aimed at creating jobs and securing U.S. industry leadership.

In addition to enhanced testing, contact tracing, and PPE, Biden would give essential workers a COVID pay boost. He pleads to guarantee paid leave for anyone who gets sick with COVID-19 or stays home to care for family members ill with the virus. This would reduce disease transmission by allowing sick employees to stay home.

Biden will also more than double the federal minimum wage, to $15 an hour which is meant to spur economic growth by giving workers more to spend, increasing both demand and business revenue. A 2014 Congressional Budget Office (CBO) report said that increasing the minimum wage would take 900,000 families out of poverty. At the same time, it would cost 500,000 workers their jobs.

Health Care Reforms

Biden will expand Obamacare subsidies to reach more and more middle-income families. Under his proposal, no one would pay more than 8.5% of their income for health insurance.

Having a universal health care will create a healthier workforce: Studies show that making preventive care available reduces the requirement for expensive emergency-room usage. Biden will also allow qualified residents of the states that didn’t expand Medicaid to sign up for the universal health plan for free.

Climate Change Measures

Biden would recommit to the Paris climate agreement and support the Green New Deal. He will restore environmental regulations, such as fuel economy standards that support electric vehicles (EV). Biden’s “Clean Energy Revolution” will invest $2 trillion and create 10 million jobs.6 It would also:

Achieve net-zero emissions by 2050
Spend $40 billion annually on clean energy research
End subsidies for fossil fuels
Eliminate carbon emissions from power plants by 20357
Upgrade and weatherize buildings, creating 1 million jobs

The Paris Agreement’s 1.5 C goal is only achievable if the world stopped emitting all carbon by 2030.8 Biden’s plan doesn’t meet that target.

Education Proposals

Biden will increase federal funding for K-12 education. Specifically and triple Title I funding for low-income family groups to raise teachers' pay. He promises universal pre-kindergarten, and all community health centers will have early childhood development experts.

To lower cost of higher education, Biden will make community colleges and public universities free for eligible students.

He will spend $8 billion on community college facilities and $50 billion on workforce training. Education is one of the better ways to close the racial wealth gap and boost economic growth. A McKinsey study shows that, if low-income students have had the same educational achievement as their rich peers by 1998, in the next decade they would have added $670 billion to the economy.

Immigration Changes

Biden’s proposals will undo most of Trump's immigration policies. The U.S. will no longer separate families at the border. Biden will raise annual refugee admissions to 125,000 from 22,491 in 2018.10 Biden will also provide a road map to citizenship for undocumented immigrants who pay taxes and pass a background check.

Biden will address the root cause of immigration at the Mexican border. He would provide a $4 billion aid package to Guatemala, El Salvador, and Honduras, which are countries plagued by narco-trafficking and violence.

Affordable Housing Plans

Biden plans to provide $640 billion over the next 10 years to provide affordable housing. He will target the homeless, the formerly incarcerated, and the veterans. Subsidized housing allows the residents to focus on improving their job skills and education. It will provide some stability during bouts of unemployment, so children can remain in school. Specifically, he would:

Establish a $100 billion Affordable Housing Fund to construct and upgrade affordable housing
Expand the Low-Income Housing Tax Credit
Add $10 billion to Community Development Block Grants
Fully fund Section 8 rental assistance and add $5 billion in annual tax credits for low-income renters12

Tax Approach

Biden aspires to increase federal revenue by $3.8 trillion over the first 10 years, including through individual tax increases. He will do this by imposing a 12.4% Social Security payroll tax for those making more than $400,000 a year. He will repeal the Trump tax cuts for high-income filers, and increase the corporate tax rate to 28%.13

Biden will make the tax code more progressive, meaning high-income households pay a larger share of their incomes in taxes than do lower-income taxpayers. Studies show that progressive taxation reduces income inequality by allowing the poor to save more.

Infrastructure Rebuilding

Biden will rebuild infrastructure, targeting funding low-income neighborhoods, training programs, and carbon dioxide (C02) reduction. The plan includes investing $5 billion over five years to improve battery technology for electric vehicles and add charging stations. Biden’s plan will also expand the nation’s rail system, invest in high-speed rail, and give Amtrak incentives to become fully electric.

Trade

Biden will set a goal in restoring the American leadership in strategic areas such as clean energy, artificial intelligence (AI), and quantum computing. To confront the Chinese trade barriers, Biden will work with U.S. allies to present a united front in trade disputes.