Factbox-Biden, Harris’ unfinished business: taxes on rich, childcare credit
2024.08.16 05:15
By Trevor Hunnicutt
WASHINGTON (Reuters) – U.S. President Joe Biden will leave behind several economic policy ambitions that were met with congressional or judicial opposition during his four-year term in office.
His vice president, Kamala Harris, may have an opportunity to revive some of the proposals if she is elected to replace the Democrat in the Nov. 5 election. These are some of the main unfinished economic proposals from Biden’s term in office.
TAXES ON THE RICH
One of the major unfulfilled ambitions of Biden’s and Harris’ economic policy was to raise taxes on the wealthy and big corporations – but not on people making less than $400,000 per year. Both Democrats have called for cutting taxes on workers’ tips.
The goal was to create more parity between ultra-rich people who pay single-digit percentages in taxes on their income and the working class who pay higher rates, partly because of the lower rates on some forms of investment income.
Democrats also want to expand the U.S. tax base, which has been for decades insufficient to fund the federal government’s current spending and the nation’s growing long-term social spending obligations, such as Social Security and Medicare.
Republicans and some economists argue that the proposed measures could suppress business activity, economic growth and push the people and businesses responsible for creating jobs to other countries.
The debate will come to a head in 2025, when provisions of the Tax Cuts and Jobs Act expire. That was the 2017 measure Republican former President Donald Trump signed, which cut corporate and individual tax rates and increased family tax credits, among other measures.
ADDRESSING SOCIAL ILLS
Biden and Harris also wanted to expand the role of government in curing social ills, from childhood poverty to old age misery, deficient healthcare and education inequality.
They briefly expanded a child tax credit that provided up to$3,600 per child to parents in 2021, but the measure faced Republican opposition and expired after that year despite leading to a significant decline in child poverty.
Democrats want to bring the measure back, and Trump’s campaign has signaled openness to an expansion of the credit.
Biden and Harris also want to add funding that could provide paid family leave and create jobs in elder care and education. Biden’s and Harris’ efforts to forgive student loans have been met with significant pushback from courts.
Republicans often question the fairness and effectiveness of public-sector economic interventions and have called for the government to focus more narrowly on tax cuts, deficit reduction and national security.
INFLATION
Democrats have been dogged by voter anger and Republican attacks over inflation in the post-COVID period that they initially dismissed as “transitory.”
While administration officials see the primary responsibility for controlling inflation as lying with the Federal Reserve, Biden and Harris have each described lowering costs as their top economic priority.
They’ve zeroed in on corporate “greed” and supply chain issues, pushing to ramp up enforcement of competition law as well as replacing rusty bridges and lead pipes that can raise costs and strangle economic growth potential.
And they’ve been willing to allow U.S. fossil fuel production to hit record levels despite their climate goals, and to deploy strategic oil reserves to cut prices at the pump. Trump has said the reserves should be used only in case of emergency.
Housing consumes a third of Americans’ spending, and Harris has signaled she wants to do more to address high costs that have put homeownership out of reach for many.
INDUSTRIAL POLICY
Biden and Harris have proudly pushed for a new U.S. industrial policy that uses government direction and funding to protect and spur growth in specific industries.
The industries favored by the Democrats include clean energy, electric vehicles, space, quantum computing, cybersecurity and semiconductors.
Biden and Harris have argued that expanded manufacturing in these areas can create jobs, raise wages, strengthen labor unions, spur economic activity, increase economic competitiveness with other countries and protect the United States’ national security edge.
