President Joe Biden campaigned on an economic platform that included strategies to support the middle class, extend healthcare, raise taxes on the wealthy, and invest trillions of dollars in green energy infrastructure. The COVID-19 pandemic and the war in Ukraine have fueled high Inflation and resulting interest rate hikes from the Federal Reserve.
On March 11, 2021, Biden won his first major economic victory by signing the American Rescue Plan Act of 2021 into law. It's part of his Build Back Better Plan, which included the American Jobs Plan and the American Families Plan. Although neither passed Congress, some of the plans formed the Inflation Reduction Act, passed in August 2022.
- President Biden provided COVID-19 relief through the $1.9 trillion American Rescue Plan, the first leg of Biden's economic plan.
- Biden hopes to add to the Affordable Care Act and provide 97% of Americans with health insurance coverage.
- President Biden's plan would raise 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%.
- The president addressed student loan debt and the option of free college for those making up to $125,000.
- Biden hopes to invest in clean energy as part of his $2 trillion American Jobs Plan during his first term as president.
The American Rescue Plan
Before his election, Biden saw what many economists called a K-shaped recovery and that "the wealth of the top 1% of the nation has grown...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 were the main goals of the American Rescue Plan.
President Joe Biden formally announced his $1.9 trillion COVID-19 stimulus plan on Jan. 14, 2021, which passed on March 11, 2021. It included $1,400 stimulus checks, extended unemployment benefits, and a vaccine rollout.
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).
Additional funding was provided for eviction and foreclosure moratoriums that 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. Child care and food program funding and an expansion of the child care tax credit for one year were also part of the program.
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 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.
Public Health Efforts and Schools
During the COVID-19 crisis, Biden issued an executive order, partnering with the Occupational Safety and Health Administration (OSHA) with rules to protect all workers. A $400 billion proposal 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 funding helped governments deal with revenue shortfalls to keep front-line public workers on the job, small business grants and loans, and $20 billion for public transit agencies.Congress approved almost $2 billion to modernize and secure federal information technology.
Biden argued against the Trump administration's attacks on the Affordable Care Act and campaigned to protect and build on the ACA. Biden does not support Medicare-for-all or eliminating private insurance.
The healthcare proposal expands Obamacare so that more than 97% of Americans are insured at a cost of $750 billion over ten years.He wants to eliminate the 400% federal poverty level income cap for tax credit eligibility and lower an employee's maximum contribution for coverage to 8.5%. President Biden's promises include:
- 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
Biden promised to lower the Medicare eligibility age to 60 from 65 after seeing the soaring unemployment caused by COVID-19 and the measures needed to help those affected. He hopes the additional cost 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." President Biden campaigned to:
- 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, President Biden sought to make tuition free for those who earn up to $125,000 and attend two- and four-year public colleges and universities. His federal student debt campaign proposals also included canceling a minimum of $10,000 of student debt per person, forgiving the remainder of loans after 20 years with no tax burden, and federal loan forgiveness over five years for those in public service.
In August 2022, Biden 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 was up to $10,000.
On June 30, 2023, the Supreme Court struck down President Biden’s attempt to forgive more than $430 billion in student loan debts. In the 6-3 opinion, the justices in the majority found the forgiveness program overstepped the bounds of federal law and usurped the power of Congress to control government spending.
In response to the decision, President Biden initiated the Saving on a Valuable Education (SAVE) Plan. SAVE is an income-driven repayment (IDR) plan that became available to student loan borrowers in August 2023 and includes the following benefits:
- Sets monthly payments at 5% of discretionary income for undergraduate borrowers
- Changes the discretionary income formula so that an estimated one million student loan borrowers will have a monthly payment of $0.
- Halts the capitalization of unpaid interest. Loan balances will not grow as long a payments are kept current.
- The plan eliminates the need for a spouse to cosign an IDR application.
Biden campaigned to raise the federal minimum wage to $15 and eliminate "right to work" laws. He wants to remove "abusive" non-compete clauses, remove rules that prevent employees from discussing pay with each other, and stop companies from classifying low-wage workers as managers to avoid paying them overtime.
Biden 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 America
In July 2020, Biden proposed a $700 billion plan to boost America's manufacturing and technological strength. This involved government spending $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
President Biden proposed to spend $1.3 trillion on infrastructure over a decade. This plan includes $50 billion for repairing roads, highways, and bridges, $20 billion for rural broadband infrastructure, $400 billion over ten years for a new federal agency to conduct clean-energy research and innovation, $5 billion over five years for electric car battery technology, and $10 billion over ten years on transit projects that serve high-poverty areas.
The $1.2 billion Infrastructure Investment and Jobs Act provided $550 billion for rebuilding roads and bridges, improving public transit, replacing lead pipes, addressing drinking water contamination, and expanding access to high-speed internet. Biden supported the idea of a Green New Deal to ensure the U.S. has a carbon-pollution-free power sector by 2035 and reaches net-zero emissions no later than 2050. He promised to rejoin the Paris Agreement, which he did in January 2021.
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.
According to Pew Research, 50% of American adults lived in middle-income households in 2021. 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 2020 was $90,131.
Rural communities make up 20% of the U.S. population and were also targeted by Biden's goals. 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, and expanding health services and medical training programs, Biden hopes to assist those in areas with persistent poverty.
How Is the Biden Administration Stimulating the Market for Electric Cars?
To stimulate the market for electric cars, Biden's Infrastructure Investment and Jobs Act invests $7.5 billion to build a national network of 500,000 electric vehicle chargers, to make charging predictable, reliable, and easy. The plan also provides 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.
What Is an Income-Driven Repayment Plan?
Income-driven repayment (IDR) plans are?designed to make a borrower's student loan debt more manageable by giving them a monthly payment based on income and family size.
The Bottom Line
As an incoming President, Biden faced many challenges, such as the ongoing COVID pandemic, issues arising from the pandemic, and high inflation. His economic plan has aimed to address these issues and other areas to improve the lives of those living in the country.