Joe Biden won the Democratic nomination by emphasizing his relative moderation, but he is preparing to govern as an activist. His campaign has outlined plans for nearly $8 trillion in new federal spending over the coming decade, and $3 trillion or more in new taxes. Think LBJ (or maybe Hubert Humphrey, if he had won in 1968), not Bill Clinton.
Earlier this year, Biden’s mission was to dispatch competitors from the activist wing of the party, most especially Senators Bernie Sanders and Elizabeth Warren. He did so by hammering the $30 trillion price tag of Medicare for All, the middle-class tax hikes it would necessitate, and the elimination of private insurance it would require. When his opponents offered unpersuasive rejoinders, Biden’s eventual victory was assured. A pivot to a more expansive platform was inevitable after the primaries to sharpen the contrast with President Trump. Two factors are pushing Biden to make new federal programs and spending an even more prominent focus in the general election.
First, the Sanders-Warren wing of the party is a force independent of its preferred candidates. It may not be able to decide primary contests, but it can influence voters in November by signaling enthusiasm or apathy for the party’s nominee. The Biden campaign wants to avoid intraparty sniping, and, toward that end, worked for months to produce a “unity” agenda with the Sanders camp. On health care and student loans, Biden embraced expensive ideas promoted by his former rival.
Second, the COVID-19 pandemic has dramatically altered the landscape. The economy has suffered a severe blow, and millions of Americans have lost their jobs and seen dramatic falls in their earned incomes. Many Democrats believe the rapidly shifting political environment has opened up new possibilities for expanding social welfare programs to address voters’ rising insecurity.
The dramatic widening of legislative possibilities is evident in the flurry of bills passed by Congress since February, with a combined ten-year cost of $3.7 trillion and another $1.5 to $2 trillion waiting in the wings. The Biden campaign, and Democrats generally, expect the current, spending-friendly environment to carry into 2021 no matter who is president.
The most expensive item on the emerging Biden agenda is health care, just as it was for President Obama a dozen years ago. Biden wants to increase Affordable Care Act (ACA) subsidies, boost enrollment in Medicaid, create a new public option for working-age Americans and their families, and, at Sanders’ urging, expand Medicare to persons age 60 to 64. All totaled, Cornerstone Macro (a financial research and advisory firm) expects these provisions to cost $2.0 trillion over a decade. New price controls on prescription drugs might provide $0.4 trillion in offsetting savings.
The next most expensive item — at $1.7 trillion — is for federally-financed infrastructure, green energy, and carbon reduction programs. There will be new subsidies for the auto industry, railroads, highways, city transit systems, electric vehicles, and much else. It is not the $10 trillion-plus program that some in the party have advocated, but it is a sizeable step in same direction.
The campaign has also released plans for: primary and secondary education ($0.8 trillion); student loan relief and higher education support ($0.8 trillion); manufacturing and industrial sector support ($0.8 trillion); housing subsidization ($0.6 trillion); paid leave for sicknesses and family reasons ($0.5 trillion); expanded Social Security benefits ($0.5 trillion); financial support for caregivers of children and the elderly ($0.5 trillion); and funding for the opioid crisis, narrowing economic disparities for minority populations, and much else.
To cover this new spending, Biden has specified $3 to $4 trillion in new taxes, almost all of which would fall on higher-income households. He would: push the corporate tax rate up from 21 to 28 percent; apply the combined employer-employee Social Security payroll tax rate of 12.4 percent to all earnings above $400,000 annually; increase the top income tax rate to 39.6 percent immediately, up from 37.0 percent today; tax capital gains as ordinary income; phase out passthrough business income deductions for households with total incomes over $400,000 annually; impose new taxes on pharmaceutical manufacturers, banks, and real estate companies; and impose many other smaller tax hike provisions.
Campaign plans can be both over and under-hyped. They are not dispositive of what will happen after the election. Some ideas pushed during a campaign are unworkable, or not of sufficient priority to put on the agenda in the early months of a presidency. But voters do expect winning candidates to be faithful to what was promised, at least in general terms.
If Biden were to win in November, it is certain that health care, education, green energy, manufacturing jobs, and tax hikes would be front and center on the congressional agenda, along with continued pandemic relief measures. And if the Democrats were to take control of the Senate, much of this agenda could be enacted through the budget reconciliation process, which allows budget-related items to pass with a simple majority instead of 60 votes. There is also talk among some Democrats of eliminating the legislative filibuster, which would open up even more possibilities.
Still, it is rare for presidents to get their entire agendas through Congress even when their parties are fully in control of it. So, if Biden were to win, some items wouldn’t make the cut. For instance, an expansion of Medicare to those age 60 and older may fail because of the program’s already substantial financial challenges.
The former vice president was a pragmatic dealmaker during his long Senate career, and that profile is still evident during the current campaign. But 2020 has upended American life, and the nation’s politics. All signals are that he is now prepared to champion the much-expanded federal role in American life that many in his party favor, even if that isn’t the mission he envisioned when he decided to run.
James C. Capretta is a Contributor at RealClearPolicy and holds the Milton Friedman chair at the American Enterprise Institute.
