Trevor Hunnicutt
WASHINGTON (Reuters) – U.S. President Joe Biden will abandon some economic policy ambitions that faced opposition from Congress and the judiciary during his four years in office.
If Vice President Kamala Harris wins the Nov. 5 election to replace Biden, there may be an opportunity to revive some of the proposals, which are among the major economic proposals left unfinished during Biden’s term.
Taxing the wealthy
One of the big ambitions left unfulfilled by Biden and Harris’ economic plan was to raise taxes on the wealthy and big corporations but not on people making less than $400,000 a year. Both Democrats want to cut taxes on workers’ tips.
The aim was to increase equality between the ultra-rich, who pay single-digit tax rates on their income, and the working class, who pay higher tax rates due in part to lower rates on some investment income.
Democrats also want to expand the U.S. tax base, which for decades has been insufficient to cover current federal spending and the country’s growing long-term social spending obligations, such as Social Security and Medicare.
Republicans and some economists argue the proposed measures could stifle business activity and economic growth, driving people and companies responsible for creating jobs elsewhere.
The debate will come to a head in 2025, when provisions of the Tax Cuts and Jobs Act, a bill signed by former Republican President Donald Trump in 2017 that cut corporate and individual tax rates, increased the family tax credit and other measures, are set to expire.
Addressing social issues
Biden and Harris also wanted to expand the government’s role in fixing social ills, from child poverty to misery in old age to inadequate health care to education inequality.
He temporarily expanded the child tax credit to give parents up to $3,600 per child in 2021, but the measure faced Republican opposition and expired that year, even though it led to a significant drop in child poverty.
Democrats want to reinstate the measure, while the Trump campaign has signaled a positive stance on expanding the deduction.
Biden and Harris also want to add to the budget to provide paid family leave and create jobs in elderly care and education. Biden and Harris’ student loan forgiveness efforts have faced strong pushback from the courts.
Republicans have often questioned the fairness and effectiveness of public sector intervention in the economy and have called for the government to focus on lowering taxes, reducing the budget deficit and addressing national security.
inflation
Democrats have been plagued by voter anger and Republican attacks over post-COVID inflation, which they initially dismissed as “temporary.”
Administration officials see primary responsibility for tame inflation as the Federal Reserve’s responsibility, but both Biden and Harris have made cutting costs a top economic priority.
They have zeroed in on corporate “greed” and supply chain issues, pushing for stronger enforcement of competition laws as well as replacing rusty bridges and lead pipes that could increase costs and stifle potential economic growth.
And they are willing to allow U.S. fossil fuel production to reach record levels despite climate change goals, and are willing to deploy strategic oil reserves to lower gasoline prices, even though President Trump has said the reserves should only be used in emergencies.
Housing costs account for a third of Americans’ spending, and Harris has said she wants to do more to address the high costs that put homeownership out of reach for many.
Industrial Policy
Biden and Harris have proudly promoted a new U.S. industrial policy that would use government guidance and funding to protect and promote growth in certain industries.
Industries favored by Democrats include clean energy, electric vehicles, space, quantum computing, cybersecurity and semiconductors.
Biden and Harris argue that expanding manufacturing in these regions will create jobs, raise wages, strengthen unions, spur economic activity, make our economy more competitive with other countries and protect our national security advantage.
(Reporting by Trevor Hunnicutt and Deepa Babington Editing by
