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President Biden has now been in office for 100 days. Okay, technically 104 days. During this time, the president’s tweets have gotten a lot more boring, but the federal government’s plans to intervene in the economy have gotten a lot more interesting.
In his joint address to Congress last week, Biden called for an agenda worth billions that could fundamentally change the economy. And now it seems like the conservative man named “Sleepy Joe” has beaten the Red Bulls and is ready to pay and spend taxes like no president has been in generations.
Here’s a quick rundown of some of President Biden’s biggest business initiatives.
The American rescue plan
By far the most consistent thing President Biden has done for the economy is the US $ 1.9 trillion bailout that he put into law on March 11th. It contains:
- A new social safety net for kids that loud a Columbia University studycould reduce child poverty by more than half. It does this by increasing the federal child tax credit to $ 3,600 per child under six and $ 3,000 for children ages six to 18, the IRS can send monthly checks to parents, and the credit is fully refunded (i.e. American parents who pay little federal taxes still get it). The program is only approved for one year, but the White House wants to make it permanent.
- Lots of money to help Americans recover from the pandemic, including $ 1,400 checks for Americans earning less than $ 75,000, a $ 300 boost to weekly unemployment benefit and a 15 percent Increase the benefits of grocery brands (SNAP). Both unemployment and food stamp regulations will be set to sunset in September.
- Lots of money to help Americans live, including $ 21.6 billion to help people pay their rent $ 5 billion to help the homeless, and over $ 10 billion to help homeowners pay off their mortgages.
- More than $ 50 billion to defeat the spread of COVID-19
- $ 31 billion Help Indians. Congressional Democrats have called it “the greatest infusion of dedicated resources to indigenous communities in US history.”
- $ 28.6 billion in grants to save restaurants.
- Help around $ 250 billion K-12 schools, union pension funds, and Child minders.
- $ 40 billion for higher education.
- $ 350 billion to help states and cities recover from the pandemic, mostly at their own discretion. However, the bill specifically states that this money cannot be used to lower taxes.
Biden initially wanted to include a national minimum wage of $ 15 in this legislation, but this was done after heavy lobbying by industrial groups, Conservatives, and moderate Democrats who opposed it, and a Senate MP decision that such legislation would not be passed by a simple majority could, was deleted because of bizarre and complicated Senate rules.
The American employment plan
The American Jobs Plan, touted as the Infrastructure Plan, uses a definition of “Infrastructure” to mean something much bigger than just repairing roads and bridges. We’re talking about investing to fight climate change, reshape our energy economy, tackle racial inequalities, and boost American innovation and manufacturing to create millions of well-paying jobs.
With the unveiling of its $ 2.3 trillion spending proposal on March 31, the White House declared, “This is the time to redefine and rebuild a new economy.” The plan includes:
President Biden plans to pay for all of this by increasing the corporate tax rate from 21% to 28% for 15 years. In doing so, he would partially reverse one of President Trump’s signature policies (before Trump, the corporate tax rate was 35%). Biden also plans to introduce a “global minimum tax” of 21%, where the government will calculate what companies pay from country to country and then tax them to ensure “profits are made in tax havens”. He also wants to step up IRS audits in the corporate sector.
The White House is hoping to get that package passed this summer, but with a 50:50 split in the Senate, it will have to herd cats – and likely rely on VP Kamala Harris’s tie – to make it happen.
The American family plan
Last week President Biden unveiled the American Families Plan. It weighs in at $ 1.8 trillion – $ 800 billion in tax credits and $ 1 trillion in spending on a range of welfare, education and childcare programs. Here are some of the major pillars of the plan:
- $ 225 billion for paid family and sick leave. The plan calls for Americans to receive up to $ 4,000 per month for 3 months if they have children or struggle with a family disease.
- $ 225 billion for child care. The White House says the plan would save the average family $ 14,800 a year in childcare costs. This would make some of the temporary measures put in the American bailout plan permanent.
- $ 200 billion universal preschool for two years. If the White House gave three- and four-year-olds free preschool, it would save the average family $ 13,000 over the two years of school.
- $ 109 billion for two years free community college. This includes additional funding of $ 80 billion for Pell Grants and $ 46 billion for historically black colleges and universities.
The White House suggests that we pay most of this by increasing IRS enforcement and raising taxes on the rich. They want to increase the highest income tax bracket from 37% to 39.6% and tax capital gains at the same tax rate as wages.
If passing the American employment plan with a 50:50 Senate is like herding cats, then passing the American family plan is like looking after cats through a field of catnip, mice and land mines. It’s going to be difficult.
But will all of this cause inflation?
The federal government spent between three and four trillion dollars last year to clean up the chaos caused by COVID. That’s about a quarter of America’s GDP. If that amount of money alone were a nation’s GDP, that nation would have the fourth or fifth largest economy in the world last year. And that doesn’t include the efforts of the Federal Reserve, which is also pumping money into the system.
With so many dollars sloshing around in the economy – and trillions more being proposed – inflation hawks are screeching. But they have been warning of runaway inflation for decades – and it has yet to happen. Could all of this spending push us above inflation? We will all be watching consumer prices in the months ahead.
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Copyright 2021 NPR. Further information can be found at https://www.npr.org.
An earlier version of this story incorrectly stated that the proposed paid family and sick leave program would provide vacation travelers with up to $ 4,000 per week. It was corrected to say they would get up to $ 4,000 a month.