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 percent from 55 percent 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 percent by 2030, the analysis showed.
Biden campaign officials couldn’t be reached for comment on the Penn Wharton analysis.
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.
House Budget Chairman John Yarmuth, who often lamented the rise of debt under Trump’s watch, said he wasn’t concerned that Biden’s policies might also lead to increased borrowing.
The Kentucky Democrat told CQ Roll Call in an emailed statement that “investments” in things like education, health care, infrastructure and research and development “have the potential to rebuild and reshape our economy, expand opportunities for millions of Americans, and improve our long-term fiscal outlook.”
Yarmuth and others have argued since even before the pandemic hit U.S. shores that low interest rates and inflation have made taming the national debt less of an immediate priority.
“We cannot allow unfounded fears of debt to dissuade us from addressing the urgent needs of the American people and mitigating real pain and suffering in the economy and in communities across the country,” Yarmuth said Monday.
‘Doesn’t make sense’
One of the architects of Trump’s tax cuts, estimated to add some $1.9 trillion to deficits over a decade, now says debt fears aren’t unfounded at all.
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 percent of filers would shoulder 80 percent 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 percent 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 percent by 2030, the study said. But it would result in no change to GDP by 2040 and an increase in GDP of 0.8 percent by 2050.