During the first presidential debate in September, both candidates answered where they think the economy is headed. Trump believes in a V-shaped recovery, basically a quick rebound, while Biden prefers a K-shaped recovery, with the rich recovering while the rest of the country moves slower.
Biden’s theory on where the economy is headed was further solidified during last week’s second presidential debate in Nashville, Tennessee, and during his October town hall on ABC. In Nashville, Biden said his economic plans could create more than 18 million jobs, according to a “Wall Street firm.”
The “firm” Biden is referring to is Moody’s Analytics, and their chief economist, Mark Zandi. Zandi’s endorsement of a Biden plan may be litmus test for some, but Zandi’s own projections have fallen flat. In 2016, Zandi predicted that President Trump’s tax and economic proposals would create a “lengthy recession” and, he overstated the Obama administration’s response to the Great Recession.
Think tanks, media outlets, and academic institutions analyzed Biden’s economic proposals, too. The main takeaway in the media focused on Biden’s proposed tax increase – up to 62.6 percent on those earning over $400,000 a year. But several other pieces of the plan are drawing plenty of criticism.
The Hoover Institute recently released their analysis of many of the Biden economic policy proposals summarized in their “Biden Economic Agenda” study.
The key points from the study show it would lead to a reduction of full-time employment by three percent, a reduction of real GDP per capita by more than eight percent, and roughly 4.9 million fewer employed individuals.
The study also claims that median household income would shrink by $6,500 by 2030. Hardly a glowing recommendation for an economic plan as we steer into another uncertain quarter of the “Lockdown Recession.”
The New York Times says the Biden plan would generate $2.5 trillion.
The $2.5 trillion figure is a median estimate. That number fluctuates depending on which analysis you read. The Tax Policy Center pegs the cost of Biden’s proposed tax increases at $2.4 trillion, the Tax Foundation says it would be $2.65 trillion, and the American Enterprise Institute (AEI) tallies it at a whopping $2.8 trillion.
The Wall Street Journal editorial board is more reserved on Biden’s plan. “The risk from Joe Biden’s policies isn’t that they will send the economy reeling right away. The problem is that they will have a long-term corrosive impact by raising the cost of capital, reducing the incentive to work and invest, and reducing productivity across the economy.”
According to AEI, Biden would repeal a cap on state and local tax (SALT) deductions and major provisions from the 2017 Tax Cuts and Jobs Act passed by the Trump administration. Pacific Research Institute economist Wayne Winegarden published a study about the benefits of the SALT cap for low-tax states and how it exposes the spending issues in high-tax states like California last year. While Biden’s repeal of SALT deductions will fly over most voters’ heads, his plan will again force low-tax states to pay for the high spending in high-tax states.
The Hoover Institute study also hints at the impact of Biden plan’s push toward clean energy and single-payer health insurance. According to the study, Biden’s energy proposals could increase per capita demand for electric power by 25 percent while an estimated 70 percent of the baseline supply that are fossil fuels would be taken offline.
The west coast is offering a first-hand account of what happens when fail to address peak electricity demand challenges while relying heavily on renewable energy. Earlier this year, California regulators pointed the finger at one-another as the state implemented mandatory rolling blackouts for the first time in more than 20 years.
I wrote about the blackouts, and how the agency in charge of monitoring the state electrical grid sounded the alarm about renewable energy supply issues more than a year before.
Pacific Research Institute has highlighted questionable energy mandates including California’s unnecessary energy costs in Legislating Energy Prosperity and Colorado’s low emission vehicle standard study. Many of these studies show these policies had a limited impact on reducing emissions, while instead hurting economic growth, keeping electricity prices high, and inflating gas prices.
The other piece of Biden’s economic agenda under scrutiny is healthcare. Under Biden, coverage expansion for his public option plan would cost $2.25 trillion and bring in 15 to 20 million new people. Pacific Research Institute audiences are no stranger to the danger of Biden’s healthcare plans.
PRI President and CEO Sally C. Pipes has documented the Biden public option plan as a steppingstone to single-payer healthcare. Democrat Senator and socialist journeyman Bernie Sanders even led Biden’s unity task force that claimed their policy goals are to achieve “universal health care coverage.” The former vice president affirmed his commitment to the public option during the second presidential debate saying, “What I’m going to do is pass Obamacare with a public option, become Bidencare.”
No one in the Biden seems to want to talk about how they’d move more than 157 million Americans from private to public health insurance. This is the federal government we are talking about after all.
Presidential debates are more about polished candidates, five-second soundbites, and wedge issues than knee-deep policy white papers. But the lack of in-depth analysis of where a new Biden administration could take the United States leaves many in the dark.
This late look at what Biden is proposing for the American economy could help us stave off the coronavirus recession. Or Biden’s Economic Plan could cause a second Great Recession.
Evan Harris is the media relations and outreach manager for PRI.