Joe Biden puts together a plan to get the economy out of a ditch of pandemic before the November election – and it is shaped to include a full lotta consumption.
“The size of the crisis in 2008 was huge, but this time we have several overlapping crises,” said Jake Sullivan, the Biden campaign’s senior policy adviser who served in a similar role for Hillary Clinton’s campaign in 2016. “As a result, the feeling of Opportunity in both political and political terms is great both in the scope of the agenda and the size of the investments that the Vice President wants to make. ”
Some progressives spent years criticizing Obama for decisions they saw as too kind to Wall Street. They also saw Obama’s approx. 800 billion $ Stimulus package as too small to address the scale of the Great Recession, a mistake they say contributed to years of slow growth – for which Obama and Biden are still being hammered politically – and increased income inequality.
Defenders of the stimulus say it was largely working to end the recession and that the White House faced limitations on the size that the Senate imposed on them. But they recognize that state and local job losses and other budget cuts were among the problems that hit the recovery for years – a point that House Democrats have maintained as a top-of-mind concern this year.
Whatever the case, Biden’s group of internal and external advisers is certainly more to the left of Obama and includes Senator Elizabeth Warren (D-Mass.), Left-wing economists Heather Boushey, Lisa Cook, Raj Chetty, William Spriggs and Jared Bernstein, who all support bold tax and spending policies to fulfill the former vice president’s promise to create “the most progressive administration” since Franklin Delano Roosevelt.
The broad economic advisory group is not completely dominated by hardcore liberals. Gene Sperling, who served in both the Obama and Bill Clinton administrations, is also an important voice in Biden’s ear, as is Jeff Zients, who served as Obama’s director of the National Economic Council and is now co-chair of the Democratic candidate’s transition team. Zients is a wealthy investor with deep ties to the financial industry, giving the campaign the opportunity to reassure corporate America that their concerns will not be completely unaddressed. Ben Harris, who also served as Biden’s top economic adviser to the Obama White House, is also said to be a somewhat more moderate voice with experience in the financial industry. But even people like Sperling have had a tendency to left in recent years – even though they may stop pushing Medicare for All.
Biden also talks to Summers, who has been moving steadily to the left since serving in the White House. The former Clinton Treasury secretary and Obama NEC director has become less concerned about deficits given structural problems in an economy that has tipped most of its gains toward the upper end of the income spectrum in recent years. Covid-19 has only exacerbated this problem for salaried employees who do not have the luxury of working from home like many high-paying, salaried employees.
Biden and his advisers have avoided putting a dollar figure on the size of the stimulus the former vice president would seek if he wins. Some of it depends on whether Congress approves additional spending this year on top of the nearly $ 4 trillion already approved to combat the economic devastation Covid-19 has created, leading to the largest quarterly economic decline in the record and has left nearly 30 million people still receiving some form of unemployment benefits.
Biden told POLITICO earlier this year that he wanted a package “hell much bigger” than the original $ 2 trillion CARES Act. He is said by close advisers to be deeply concerned about economic “scarring” from the Covid-19 crisis, which means lasting effects on younger workers if they cannot return to the workforce quickly and start forming households. Many of these lessons stem from the painterly nature of the recovery from the Great Recession.
In a recent interview, Bernstein suggested that if he wins, Biden expects an economy that is still functioning far below potential – the so-called “output gap” – and in desperate need of massive federal intervention.
“Every forecast I have seen, including my own, suggests that the output gap and unemployment will be very high early next year,” he said. “I do not want to give a number in the trillions, but it must be very important in the spirit of the size of the bills we have seen so far.”
And Biden will come under immediate pressure from the left if he wins and Democrats take the Senate, to go as big as possible on stimulus spending, tax increases on the richest and new rules on Wall Street. Progressives are already concerned about some of Biden’s comments suggesting a concern over long – term deficits and paying for expense bills.
“The idea that the United States faces any major risk from our debt burden is simply wrong,” said Dean Baker, a senior economist at the Center for Economic Policy and Research and a frequent critic of the size of Obama’s 2009 stimulus proposal. “If for some reason private investors were more reluctant to keep debt in the United States, the Fed could simply step in and buy it. If the US is struggling to recover from this recession, there is no need to worry about large deficits. ”
Baker added that he was mostly satisfied with the composition of Biden’s financial advisory team and suggested that any stimulus bill should be about 4 to 5 percent of annual GDP, or about $ 1 trillion a year.
“As a group, these people are pretty progressive, and at least they want his ear. Whether they carry the day in arguments or not, who knows, ”Baker said. “But Biden was there under Obama, and I think he recognizes what is universally recognized among Democrats that they made a really big mistake by not getting more.”
Biden also said last week that an increase in corporation tax would be among his first acts as president. “I wanted to make the changes to the corporation tax on day one. “The reason I made the change in corporation tax is that it can raise $ 1.3 trillion if they just start paying 28 percent instead of 21 percent,” he told CNN. “What are they doing? They are not hiring more people. What are they doing? They are buying back their own shares.”
In addition to a major stimulus and an increase in corporate tax, Biden has committed to winding down Trump’s tax cut, which took effect in 2018, and imposing higher marginal rates on individuals with incomes above $ 400,000. “I want to get rid of most of Trump’s $ 2 trillion tax cut,” Biden told wealthy donors in June. “And many of you do not like it, but I want to close loopholes like capital gains and reinforced base.”
Biden’s promises to raise taxes on the wealthy and businesses have not affected his ability to raise money. The campaign and the Democratic National Committee raised a record-breaking $ 365 million in August, skipping the $ 210 million raised by the Trump campaign and the Republican National Committee.
He has also essentially erased Trump’s advantage with the economy as a problem in the last few months. Several polls show that the two candidates are tied to an issue where Trump enjoyed double-digit benefits in the spring. Biden is also trying to cut Trump’s 2016 numbers among Midwestern officials with a plan to impose higher taxes on companies’ foreign profits and offer tax breaks to domestic producers.
And the Democratic candidate does not plan to shy away from hammering a message to raise taxes on high-paying and large corporations, despite Trump’s constant attacks that Biden’s approach would fuel the stock market and kill the economy.
The Biden campaign is paying close attention to poll data suggesting that Americans overwhelmingly support such higher taxes, and the number has only increased since Covid-19 specifically smashed workers.
Of course, all of Biden’s big plans for taxes and spending depend on Democrats controlling the entire Congress and perhaps changing the legislative filibuster.
“People recognize that we need a significant investment,” said Sullivan, Biden’s policy adviser. “It is not to say that the GOP would not try to resist, and suddenly put on their green eye shadow again to use. But the realities today in terms of what can be invested to return to full employment are just different than they were back in 2009. ”