Joe Biden - What are his Economic Policies?

After the exit of President Trump and his aggressive international and economic policies, it's Joe Biden's turn to take the hot seat as the leader of the largest economy in the world. Let's take a look at what he intends to do as President and what will be the effect of his policies on America and the world.

Student Loans

America has been plagued with the problem of student loans. In America, parents end up paying their whole life-savings just to ensure a college-level education for their kids. In a world where a bachelor's degree is the minimum requirement for a decent job, due to a demand and supply mismatch, course fees have shot up disproportionate to the rise in the wealth of average middle-class families. Because of this many students have to take massive loans (sometimes upwards of $100,000!) just to secure an education. As of 2020, students owed over $1.6 Trillion.

Biden plans to cancel $10,000 of student debt, per student borrower. That certainly might be a relief to American students, but it will put a great economic strain on America's already debt-riddled economy. The debt of the students will likely be shifted to the government instead, which is already $27 Trillion in debt. However, the major advantage will be that American citizens who may have struggled to pay off a massive loan will now live better and more fulfilled lives.

Health Insurance

American healthcare is in a dismal state. Those without insurance have to pay an exorbitant amount for cures to the most minor ailments ($500 for removing a splinter, for example), and those with monthly insurance have to pay an equally exorbitant amount so they don't go bankrupt when they fall ill. Many people go without essential medication because they don't have insurance. Sometimes, even with insurance people can't get the financial coverage required for treating certain deadly diseases, such as cancer.

Joe Biden intends to provide health insurance to 97% of Americans within the next decade. He intends to do so by changing the Affordable Care Act (Obamacare). But to expand Obamacare to 97% of Americans will cost nearly $750 Billion. But how does Joe Biden intend to finance such an expensive proposition - which will have recurring costs on the American government for as long as it exists?

Taxation

Biden wants to increase taxes on large corporations, rich households, and those with large capital gains. With the proposals of increasing corporate tax to 28%, imposing a 15% tax on the income of large companies, increasing taxes for those having an income of over $1 million, and raising top income tax back to 39.8% - America is looking to raise nearly $4 Trillion. These taxes would mostly affect richer families who fall in the top 20% range of America's income group.

The $4 Trillion raised will go towards reducing student loans and funding the expanded Obamacare system.

Minimum Wage and 'Made in All of America'

Biden also wants to increase the minimum wage of workers from $10 to 15$. On paper, this sounds like an excellent policy that will promote human welfare. However, in reality, it is shown that an increase in the minimum wage actually leads to a large increase in the short-term unemployment rate. Of course, unemployment stabilizes over the long term only if counteractive measures are taken.

An increase in minimum wage will also promote automation, as workers become more expensive, machines capable of large-scale manufacturing become more viable as their replacement. This will add to the unemployment issue. However, Biden has also promised to boost American manufacturing with his stimulus plan 'Made in All of America'. Here he proposes to invest $700 Billion in the American industry in an attempt to create more jobs to counteract the unemployment problem.

Conclusion 

Joe Biden seems to be focusing on the needs of the American people, instead of the needs of the corporations - a welcome change for the American public.

However, there will be some adverse effects from these policies. A higher tax rate on companies with an increase of the minimum wage will lead to more companies shifting out of America, towards cheaper countries. It is also likely taxing the rich can have varied negative political effects for Mr.Biden. 

All in all, Joe Biden’s policies are focused on human growth and not merely economic growth. Will these policies catapult America into its next Golden Age, only time will tell.

Written by Rayandev Sen; edited by Alidar Kuatbekov.