The former vice president’s proposals include a new investment in pre-K universal courses, tuition-free community colleges, and clean energy – a list that reflects the priorities that emerged in the field in the Democratic primary.
Although Biden’s proposals are much smaller than those put forward by his former progressive rivals for the nomination, the senses. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts, they are still the biggest political package in decades, according to an analysis released Monday by the Penn Wharton Budget Model.
That’s more than double Hillary Clinton’s plan in 2016, even if that doesn’t account for inflation or the pandemic.
Penn Wharton found that Biden’s platform would help raise $ 3.4 trillion in new tax revenue between fiscal years 2021 and 2030, while increasing spending by $ 5.4 trillion. Almost 80% of the tax increase would affect the richest 1%.
That would increase federal debt by 0.1% and shrink the economy by 0.4% in 2030, after factoring in macroeconomics and improving the health effects of Americans.
However, by 2050, the federal debt would decline 6.1%, while the economy would increase 0.8%. This is partly because some of Biden’s spending proposals decrease after the first decade and partly because his package would increase worker productivity.
Biden calls for spending $ 1.9 trillion on education over the decade, including universal preschool, increased funding for schools with large numbers of low-income students, and two years of community college without tuition fees. It would spend $ 1.6 trillion on infrastructure, research and development, including water, bullet train and municipal transit, as well as clean energy and artificial intelligence .
Biden would also expand access to Medicare and Affordable Care Act coverage and expand long-term care for the elderly, which would cost $ 352 billion.
“They have a lot of spending, but they spend it on things that will actually help people in the long run – education, health care, infrastructure,” said Richard Prisinzano, director of policy analysis for the model. . “The types of spending they have made make workers more productive and lead to the growth of the economy in the years to come.” Biden’s tax plan plans to cover some of the expenses by repealing elements of the Republican tax law of 2017 that benefited high-income filers and increasing other taxes on the wealthy. It would also increase corporate tax rates and foreign profits. This would increase taxes by $ 3.4 trillion, not including macroeconomic effects. Just who would be hit by a bigger tax bill has become a problem in the countryside. Penn Wharton found that households with an annual adjusted gross income of $ 400,000 or less would see an average decrease in after-tax income of 0.9%, mostly as an indirect result of the increase in corporate taxes. But those who earn over $ 400,000 would see a 17.7% reduction in after-tax income.
The Biden campaign took issue with several points of the analysis, mainly the fact that it did not include several tax credits for the middle class and that the former vice president’s corporate tax increase would lead to higher taxes on workers. (The study looked at after-tax income, not taxes.)
“Biden has pledged to pay the ongoing cost of his bold, long-term agenda by making sure large corporations and wealthiest Americans pay their fair share – with no one making less than $ 400,000 with a raise. of its taxes, ”said Michael Gwin. , deputy director of the campaign’s rapid response.
Biden’s plan comes as federal spending is expected 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 relief packages aimed at stemming the economic upheaval caused by the coronavirus pandemic.
The agency projects 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 expected to reach 107% of GDP in 2023, the highest in the nation’s history. But the federal deficit is expected to skyrocket even before the pandemic hits the United States. In January, the CBO predicted that the budget deficit would likely cross the symbolic threshold of $ 1 trillion this year, despite a healthy economy with very low unemployment. This would drive US debt to its postwar highs over the next decade.
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