The former vice president’s proposals include new investments in universal preschools, tuition-free community college classes and clean energy – a list that reflects priorities that have emerged across the board in the Democratic primary.
Although Biden’s proposals fall far short of those offered by his former progressive rivals for the nomination, Sens. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts still represent the largest policy package in decades, according to an analysis published Monday by Penn Wharton’s Budget Model.
That’s more than double Hillary Clinton’s plan in 2016, even if that doesn’t take inflation or the pandemic.
Penn Wharton found that Biden̵
7;s platform would raise $ 3.4 trillion in new tax revenue between fiscal year 2021 and 2030, increasing spending by $ 5.4 trillion. Nearly 80% of the tax increase would affect the top 1%.
This would raise the federal debt by 0.1% and reduce the economy by 0.4% in 2030, after taking into account the macroeconomics and improving health effects of Americans.
By 2050, however, the federal debt would fall by 6.1%, while the economy would grow by 0.8%. This is partly because some of Biden’s spending proposals declined after the first decade and partly because his package would increase worker productivity.
Biden is asking to spend $ 1.9 trillion on education over the decade, including universal preschool, increased funding for schools with many low-income students, and two years of tuition-free community college. It would shell out $ 1.6 trillion for infrastructure, research and development, including water, high-speed rail and municipal transportation, clean energy and artificial intelligence.
Biden would also expand access to Medicare and Affordable Care Act coverage and expand long-term aged care, which would cost $ 352 billion.
“They have a lot of expenses, but they’re spending it on things that will actually help people in the long run: education, health, infrastructure,” said Richard Prisinzano, director of policy analysis for the model. “The types of spending they have done make workers more productive and lead to economic growth in recent years.”
Biden’s tax plan calls for hedging some of the spending by repealing elements of the 2017 Republican tax law to the benefit of high-income filers and increasing other levies on the rich. It would also increase the tax rates on companies and foreign profits.
This would raise taxes by $ 3.4 trillion, excluding macroeconomic effects. Only those who would be hit with a larger tax bill became a problem in the campaign. Penn Wharton found that households with annual adjusted gross income of $ 400,000 or less would see an average after-tax decrease in income of 0.9%, mostly as an indirect result of the corporate tax hike. But those earning more than $ 400,000 would see a 17.7% cut after tax.
Biden’s campaign disputed several points in the analysis, firstly that it did not include several middle-class tax credits and that the former vice president’s corporate tax increase will lead to higher taxes on workers. (The study was referring to after-tax income, not taxes.)
“Biden is committed to paying the ongoing cost of his bold long-term agenda by making sure big corporations and wealthier Americans pay their fair share – with no one earning less than $ 400,000 seeing an increase in their taxes,” he said. said Michael Gwin, Deputy Director of Campaign Rapid Response.
Biden’s plan comes when federal spending is projected to reach 32% of gross domestic product in 2020, about 50% more than last year and the highest percentage since 1945, according to the Congressional Budget Office. This is mainly due to massive aid packages aimed at stemming the economic upheaval caused by the coronavirus pandemic.
The agency expects a federal budget deficit of $ 3.3 trillion in 2020, more than triple the deficit in 2019 and at 16% of GDP, the largest share since 1945. Federal debt is projected to reach 107% of GDP in 2023, the highest in the nation’s history.
But the federal deficit was expected to increase even before the pandemic hit the United States. In January, CBO predicted that the budget deficit would likely explode this year through the symbolic $ 1 trillion threshold, despite a healthy economy with very low unemployment. This would take US debt to its postwar high in the next decade.