Despite his reputation as a moderate who can reach across the aisle, Biden’s platform is seen by experts as the most extreme proposed by a Democratic presidential challenger in decades.
“If we compare to previous Democratic plans or Trump’s plan, it is a pretty radical change,” says Stephen Gallagher, US economist at Société Générale. “But if we compare to the offering of the other Democratic candidates, it is more moderate compared to Bernie Sanders, Elizabeth Warren or even Kamala Harris.”
There was a fairly serious risk that the shift would have been even more crashing had the man Trump derides as “Sleepy Joe” not come out on top in the primaries, Gallagher says.
Four years of Trump have pushed the Democratic Party further Left as the country becomes increasingly polarised. Biden has followed his party, being forced into a number of key pledges to curry favour with Left-wing Democrats who have grown in stature.
The field of candidates in this year’s Democratic primaries have responded to the popularity of the party’s Leftists, such as firebrand socialist Bernie Sanders and liberal policy wonk Elizabeth Warren. Ultimately Democratic voters opted for a candidate who they believe is best-placed to defeat Trump – electability was a top concern, polling suggests – but the race has left its mark on Biden’s platform.
Perhaps most important for the economy has been the former vice president’s promise to do “whatever it takes” to tackle COVID-19.
“I would shut it down. I would listen to the scientists,” he said last month. States rather than the president ultimately have the power to shut down and reopen their economies, as Trump has found to his frustration. But a new Oval Office stance on the virus could still be significant for the economy.
Beyond COVID, Biden has a number of Leftist policies he claims will help America “build back better”.
He wants to almost double the federal minimum wage to $US15 an hour, up from $US7.25. Many states already have a higher minimum wage but Biden is seeking to bring the US closer to pay floors seen elsewhere. “It’s going to hurt more rural populations where the minimum wage is not nearly that high and it would be an abrupt change,” says Gallagher.
If Biden gets a clean sweep and the Democrats win the House and Senate, we are going to see a very significant shift in policy. Much more taxation, more spending and more regulation of energy, financial services and big tech
James Knightley, ING chief international economist
Workers will also be bolstered by his plans to make it easier to organise unions and collectively bargain, although some voters are likely to fear this will hit the country’s famously dynamic labour market. He wants universal paid sick days and 12 weeks of paid family and medical leave, while social security payments will be $US200 higher per month.
Biden has promised to create 5 million new jobs in manufacturing and innovation and has vowed to spend $US2 trillion over four years on clean energy infrastructure, aiming for a carbon-zero power industry by 2035. He has promised no new taxes on those earning less than $US400,000, while Trump’s corporate tax cuts will be partially reversed. The corporate tax rate will rise from 21 per cent to 28 per cent.
“It’s going to be the wealthy that are going to be paying the tax rises and you get more income for the poorer people,” says James Knightley, ING chief international economist.
Trade policy is likely to become less combative while experts say the tech titans could face a clampdown amid rising competition worries.
Biden has not made tech regulation a key plank of his campaign as rivals such as Warren did, but the Democratic party has decisively shifted towards stricter rules on Silicon Valley behemoths.
Sam McGowan of Beacon Policy Advisors, a research firm focused on Washington, says a Biden administration is likely to reflect a growing scepticism of Silicon Valley.
“If Biden wins, there’s going to be a lot of influences out there that are going to shape the kinds of the policy that they’re going to put in place. And I really think the conversation will shift towards more stringent enforcement.” McGowan says that even if a Biden administration does not aim to break up Big Tech, it will certainly make predatory acquisitions harder and enforce competition.
However, Biden’s Left-leaning agenda faces key hurdles. The 77-year old needs to win big against Trump to push through the most radical parts of his agenda.
The Democrats currently hold the House of Representatives but the other half of Congress, the Senate, is controlled by the Republicans. Many of Biden’s economic plans would be scuppered unless the Democrats win the three or more seats needed to take the Senate.
“One question is whether he might be limited by Congressional opposition. The battle for Senate control looks tight,” says Philip Shaw, Investec economist.
Knightley says: “If Biden gets a clean sweep and the Democrats win the House and Senate, we are going to see a very significant shift in policy. Much more taxation, more spending and more regulation of energy, financial services and big tech.”
His ambitions could also be limited by the state of public finances he inherits. Trump was running high deficits at close to 5 per cent even before COVID struck and sent debt soaring.
“When we get in, the pantry is going to be bare,” warned Ted Kaufman, a leading figure in Biden’s transition team. Economists also argue that his platform could be harmful for the economy in the longer term.
Gallagher says Biden’s policies would slow the economy or limit its potential, despite rising in popularity among voters. “It’s not until the economy slows that these voters will abandon their support for all these changes,” he says, highlighting Biden’s healthcare and energy plans.
Shaw adds that Biden’s tax pledges could have a significant impact on investor confidence, while the roaring recovery on the US stockmarket could be derailed by an antitrust crackdown.
Biden has framed the 2020 election as a “battle for the soul of the nation”. His plans would be transformative for the world’s largest economy – but polling suggests Americans may be reluctant to give up on Trump’s vision just yet.