What Is Joe Biden’s Economic Plan?

President Joe Biden campaigned on an economic platform to shore up the middle class, extend healthcare, raise taxes on the wealthy and invest strongly on green energy infrastructure, amongst others.

He also plans to deal with Covid-19 and the economy. Essentially, the agenda is to:

·       Provide health insurance coverage for 97% of Americans in 10 years;

·       Raise an additional USD4 trillion in tax revenue by increasing top tax rate to 39.6%, taxing capital gains and raising corporate tax rate to 28% (from 21%);

·       Forgive student loan and give college free for those earning below USD 125,000;

·       Expand “Buy American” policies;

·       Invest USD 1.3 trillion in infrastructure;

·       Spend USD 2 trillion on clean energy.

According to Pew Research, 52% of American adults lived in middle-income households in 2018. The annual income range for a middle- class household of three persons (in 2018) was USD48,500 to USD145,500. The U.S. has a proportionally smaller middle class than other advanced economies and income disparity within is growing. A growing and thriving middle class is important for social and political stability.

Rural America makes up 20% of U.S. population. This is Trump territory. Biden wants to invest USD20 billion in broadband infrastructure, create low carbon jobs, spend more in agricultural research, improve funding for farmers and SMEs and expand health care services.

Biden plans to invest USD50 billion in his first year in repairing roads, highways and bridges. Another USD10 billion over 10 years on transit projects, USD5 billion on electric car battery technology and USD400 billion on clean energy research and innovation.

For boosting America’s manufacturing and technological strength, the plan is to invest USD700 billion. Of this, USD300 billion is for R&D on technologies for electric vehicles, lightweight materials, 5G and AI.

To meet the Covid challenge, Biden has the American Rescue Plan which includes:

·       Direct aid (USD1 trillion); USD1,400 per person cheques to supplement the approved USD600. Raise minimum wage from USD7.25 an hour to USD15 an hour;

·       USD20 billion national vaccination program;

·       USD50 billion for “massive” testing;

·       Hiring 100,000 more public health care workers; and a whole host of other goodies!

What can we learn for Malaysia?

We need emphasis on clean energy or renewables; electric vehicles to reduce carbon emissions; part forgiveness of PTPTN loans; raise minimum wage to RM1,500 immediately;  R&D funds for resource-based industries; hire more health care workers; build new hospitals; focus on infrastructure and connectivity; raise broadband quality/ speed; and provide “easier” wage/ rental subsidies.

How do you finance the above?

Raise the tax rate for the top tier to 35%; introduce forex transaction tax; implement the “super” profit tax for sectors other than palm oil; and widen the SST coverage.

Perhaps, under “Emergency” rule the present Government may have the gumption and gall to introduce new incentives and finance them by targeted taxation.

 

Reference:

Deborah D’Souza, Joe Biden's Economic Plan, 20 Jan 2021, www.investopedia.com