(UnitedVoice.com) – Unlike some incoming administrations, presumptive victor Joe Biden was the vice president under one of the longest and slowest recovering economies in US history under President Barack Obama. Today, just like in 2009, when Obama was inaugurated, the economy is crippling along, albeit for very different reasons.
In Biden’s case, if he’s proven to be the winner, he will inherit an economy struggling to recover from COVID-19. Coupled with a divided Congress and aggressive economic policy proposals, a Biden economy could resemble 2010-2016. The Obama economic growth barely grew above 2%, and in 2016 the economy shrank by 1.6%.
Biden to Pursue Extreme Shift in Economic Policy
From 2017 to 2019, President Trump experienced one of the fastest economic growth periods in two decades. At one point, economic growth exceeded 4% — something Obama said wasn’t possible. Despite Trump’s economic success, Joe Biden has stated emphatically that he will take America’s economic policies in the polar opposite direction from Donald Trump’s.
Biden has said he will undo many of Trump’s deregulations that spurred the economic growth, propose substantial tax increases, and recommend a substantial increase in federal spending ranging from education and clean energy to infrastructure.
Return to Obama-Style Economic Policies
During the final six years of the Obama presidency, there wasn’t much the president could do, thanks to a divided Congress. That was, in large part, due to the united Democratic Congress and Obama passing sweeping healthcare reforms and overstepping their mandate in 2009. Republicans blocked Obama’s ability to implement any other agenda items that could transform America’s economy.
However, if Biden gets his way, he would increase spending substantially. Starting with a COVID-19 relief package, Biden could ask for $1 trillion to $1.5 trillion. That’s a drop in the bucket compared to his other proposals. Biden wants $5.4 trillion in additional spending to go, in part, towards:
- $1.9 trillion on education
- $1.6 trillion on infrastructure
To pay for it, the president-elect will need Congress’s help. Biden wants to roll back the corporate tax rate from 21% to 28%. He’s also proposing additional payroll and income taxes for those making more than $400,000 per year.
Biden also wants $2 trillion over four years to implement climate change policies that could severely impact business, manufacturing, and the energy industry. He wants to rejoin the Paris Climate Agreement and sign new executive orders that target emissions from power plants and automobiles.
How Will Biden Pay for It All?
It’s unlikely Biden will get his wishes through a Republican-led Senate. Therefore, he will need to rely on a mix of regulations to raise the money and the Federal Reserve. One idea floated by Democrats is to get rid of Trump’s immigration regulations and policies. That could add approximately 400,000 new people into the United States. By increasing the population, the theory is that will create economic growth.
What Are the Potential Consequences?
Between explosive spending proposals, tax and/or regulation increases, and a growing deficit, chances are the country could experience the Obama economy 2.0. Under Obama, not only did the economy grow slowly, so did jobs.
The biggest questions may be, how much damage did COVID-19 ultimately do to the economy, and what would Biden’s proposals do to add further harm?
Only time will tell for certain.
Don Purdum, Independent Political Analyst
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