Joe Biden’s tax and spending policies would add nearly $2 trillion to federal deficits over the coming decade, according to an analysis released Monday by a nonpartisan research group.
The Democratic presidential nominee would raise just shy of $3.4 trillion in new revenue through 2030 — through tax increases aimed mostly on the wealthy — while proposing to spend almost $5.4 trillion, according to the Penn Wharton Budget Model, a research project of the University of Pennsylvania.
Deficits are hardly a top priority of voters now, as the nation battles the COVID-19 pandemic and natural disasters and Congress contemplates another $1 trillion or more in relief aid.
According to a Pew Research survey conducted in June, the percentage of voters who view deficits as a “very big problem” dropped to 47% from 55% in 2018. And voters care more about issues like unemployment, affordable health care and the treatment of minorities by the criminal justice system, as well as the coronavirus pandemic, the poll found.
But the estimated price tag for Biden’s policies suggests why they could prove a hard sell in Congress — particularly if Republicans maintain control of the Senate or win back the House.
The $5.4 trillion in proposed new spending is a far cry from the tens of trillions of dollars proposed by Biden’s former chief rival for the Democratic presidential nomination, Sen. Bernie Sanders, I-Vt., including $16.3 trillion just to battle climate change. But it would increase the federal debt by 0.1% by 2030, the analysis showed.
President Donald Trump, who has accused Biden of waging a socialist agenda, had promised in 2016 to pay off the national debt in eight years. Instead, debt held by the public increased from nearly $14.7 trillion in fiscal 2017 to $16.8 trillion in fiscal 2019, according to figures compiled by the Congressional Budget Office.
Gary Cohn, Trump’s former top economic adviser, suggested Monday that Biden’s platform doesn’t do enough to tame rising deficits. “Just taxing to spend doesn’t make sense to me,” he told CNBC. “We have to have a plan to get our fiscal house back in order.”
But Cohn, a Democrat and former top Goldman Sachs executive, also declined to endorse Trump. Asked whom he intended to support in November, Cohn said, “I honestly haven’t made up my mind.”
The single most costly element of Biden’s spending plans are education programs that would amount to $1.9 trillion over 10 years, Penn Wharton said. Those include plans for free public college for low-income students and universal prekindergarten.
Infrastructure spending is the second most costly element, amounting to $1.6 trillion for high-speed rail, water projects, clean energy, municipal transit and technological research, among other things.
The former vice president’s health care initiatives would cost $1.6 trillion, according to the analysis, but the plan would save $1.25 trillion to mostly offset the cost — primarily through lower prescription drug costs. Biden has called for letting Medicare negotiate drug prices directly with manufacturers, for example.
Biden’s tax plans, which include raising the corporate income tax rate and raising the top rate on personal income, would generate nearly $3.4 trillion over a decade, the analysis found. The top 1% of filers would shoulder 80% of the additional tax burden, it said.
Households making $400,000 or less in adjusted gross income would see no direct tax increase, the study said. But it said those families would see lower investment returns and lower wages as a result of the increase in the corporate income tax. Biden has called for raising the corporate rate from 21% to 28 percent.
Families making under $400,000 would see an average decrease in after-tax income of 0.9 percent, the study said. By contrast, those making more than that would see an average decrease of 17.7 percent.
All told, Biden’s plans would decrease the nation’s economic output, as measured by gross domestic product, by 0.4% by 2030, the study said. But it would result in no change to GDP by 2040 and an increase in GDP of 0.8% by 2050.