Biden win could mean taxed dividends at higher rates: Equity market strategist
Joe Biden will call for a moderate approach toward reviving the U.S. economy if elected president that includes spurring manufacturing and encouraging innovation, shelving for now the more ambitious proposals pushed by progressive Democrats, people familiar with his plans said.
The Democratic nominee plans to deliver an economic speech on Thursday near his childhood hometown of Scranton, Pennsylvania, framing his argument for the rest of the campaign.
The outline of the plan covers three areas: A push to buy American and incentivizing American jobs, clean energy and the “caring” economy such as child and elder-care workers and domestic workers, a person familiar with the plan said.
He will follow Thursday’s speech with detailed policy proposals leading up to the Democratic National Convention, which begins Aug. 17. Other Democrats were being briefed Wednesday on Biden’s plans.
“Biden wants to get to the same place that many to his left want to get to but he firmly believes that it will take an incremental path to get there and that you can’t leapfrog the political reality that he has come to know in many decades in politics,” said Jared Bernstein, who is advising the campaign after serving as Biden’s chief economic adviser in the vice president’s office.
Biden’s proposals will hit some of the areas that are often discussed by both the right and left, including efforts to spur manufacturing and to encourage innovation.
“So his destination on many key issues, particularly on the economy and health care, is very similar to the further left but his path to get there is going to be more incremental,” he said.
Plan Draws from Primary Opponents
Each individual idea may seem small but “the beauty of these plans is in the totality” of everything that Biden will be proposing on the economy in the coming weeks, Bernstein said.
With an economy in recession due to the coronavirus pandemic, Biden has decided to home in on the economy, still the one area where a slim majority of voters prefer President Donald Trump’s approach. That is the only policy area in which Trump leads Biden in public opinion polls four months before the election.
Biden’s plans draw some from his Democratic primary opponents’ ideas, including a version of Elizabeth Warren’s proposal to use the federal procurement process to buy American-made clean energy for government use and export, two people briefed on Biden’s proposals said.
One source said that Biden planned to propose spending US$100 billion a year on clean energy procurement during his administration. Warren had pitched US$150 billion annually.
A promise to rebuild the American middle class has been at the core of Biden’s campaign, and was criticized for being too incremental while candidates like Warren and Bernie Sanders pitched “big structural change.” But as the coronavirus pandemic has dragged down the economy, Biden has suggested there’s a need for bigger change and that voters will have the appetite for it.“The blinders have been taken off,” Biden said an April fundraiser. “Because of this COVID crisis, I think people are realizing: ‘My Lord, look at what is possible.’”
No New Deal-Style Plans
But most of the more progressive ideas, like the Green New Deal and other large jobs programs that also hearken back to the Franklin Roosevelt policies of the Great Depression, will likely be left behind at the beginning in favor of a more step-by-step approach, the Biden campaign says.
Biden needs to attract Republicans weary of the Trump administration and independents, as well as Democrats in order to win the White House.
Steph Sterling, vice president for advocacy and policy at the Roosevelt Institute, and others on the left say they would like to see Biden contemplate a jobs guarantee or other measures that would be more in the vein of Roosevelt’s New Deal.
But a Biden adviser said such policies are not being seriously considered, though the candidate has proposed creating a U.S. Public Health Jobs Corps that would employ 100,000 people.
Biden did offer some parameters in April, adding, “Look at the institutional changes we can make without us becoming a socialist country or any of that malarkey that we can make to provide the opportunities to change the institutional drawbacks.” The U.S., he said, is “one of the few countries in the world, whatever crisis they’re faced with we’ve overcome it and we always come out stronger, better. We have a chance to really move the ball forward in the next three or four years.”
If Biden wins the presidency, he will be walking into a far different economy than he would have faced before the pandemic.
“If Biden is president he will be up against this just incredibly, incredibly weak economy,” said Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, and a former chief economist at the U.S. Labor Department in the Obama administration. “Regardless of what’s going on with COVID, whether there’s a vaccine or widespread mask-wearing or not, it will be a hugely depressed economy.”
Even with improvement in jobs and consumer spending that’s been better than analysts expected, the U.S. economy remains in a deep hole, and most forecasters expect only a gradual recovery. Unemployment, at 11.1 per cent in June, is higher than any time in the 80 years before the pandemic. Black and Latino unemployment rates are even higher.
Since mid-June, economic gains have slowed as virus cases accelerated in a variety of states, leading local officials to pause or reverse reopenings. And if lawmakers allow the expiration of extra unemployment benefits and small-business aid in coming weeks, jobs and consumption could take a further hit.
Biden has used the public outrage over the killing of George Floyd, an African-American, in Minneapolis police custody to say that racial inequalities are also economic inequalities and that going back to the way things were before the coronavirus won’t be enough.
“When we talk about imbalances of power in the economy, they are absolutely around worker and capital lines, and they are almost always also around racial lines. Not individually but a structural matter, as in, ‘who has capital and who doesn’t?’” Sterling said. “Rebalancing power in our economy and rebalancing power in our democracy is both the best way to actually make us recover and in doing so make us more resilient – all of us, black, white and brown.”
Allies are hopeful about what they’ll see.
“Vice President Biden has realized that history is calling on him not to be Roosevelt’s heir, but to be the 21st century’s Roosevelt,” said Damon Silvers, director of policy and special counsel for the AFL-CIO.