Joe Biden Has an $11 Trillion Spending Plan. Can He Enact It?

His proposals come at a time that America can least afford them.

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Good morning and welcome to the latest in our series, “The Biden Agenda.” We’ve invited some of the smartest thinkers and subject-matter experts we know to contribute to what will become an occasional series on what a Biden presidency might look like. Today, Brian Riedl, a senior fellow at the Manhattan Institute, breaks down Biden’s various spending proposals. Please see our past entries from Scott Lincicome on trade, James C. Capretta on health care, and Steven F. Hayward on climate change.

Despite an unprecedented $24 trillion in budget deficits projected over the next decade, Joe Biden is promising the largest spending spree since Lyndon Johnson. And despite the deepest recession in 80 years, Biden is demanding the largest permanent tax increase since World War II. Can gridlock save taxpayers and the federal budget from these exorbitant costs?

First, the numbers. Biden has proposed $11 trillion in new spending over the decade. His $1.4 trillion health care plan would expand the Affordable Care Act, bring a “public option” to the health exchanges, and expand long-term care assistance. More recently, Biden proposed reducing the Medicare eligibility age to 60, at an estimated cost of $300 billion. He also has proposed new spending on climate and infrastructure ($2 trillion), Social Security and Supplemental Security Income ($1 trillion according to the Progressive Policy Institute), college, K-12 education, and preschool aid ($1.5 trillion), family leave assistance ($550 billion), “Buy America” investments ($700 billion), housing aid ($640 billion), and combatting opioid addiction ($125 billion). Finally, Biden has endorsed the $3 trillion in stimulus spending passed by the Democratic House.

He would pay for one-third of this new spending with $3.6 trillion in new taxes over the decade—which, at 1.3 percent of the economy, would represent the largest permanent tax increase since World War II. This includes a $2.1 trillion corporate tax increase that would more than reverse the $330 billion tax cut that corporations received in 2017. Biden would also restore the pre-2017 tax rates for high-earning families (including phasing out the tax deduction for pass-through businesses), cap their tax deductions, and approximately double the top capital gains tax rate. The full 12.4 percent Social Security payroll tax (which currently applies to wages up to $137,700) would be re-imposed at wages above $400,000. Overall, a typical middle-income family would see a $300 tax increase (rising to approximately $1,200 in 2026 if the 2017 tax cuts also expire), versus $300,000 in annual new taxes for the richest 1 percent of earners. Marginal income tax rates would reach 64 percent for some taxpayers when including state taxes, and the tax on inflation-adjusted investment returns would exceed 60 percent for many taxpayers. 

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  1. Avatar photo
    Slp

    Very late to comment here but would you explain why raising the corporate tax rate "Biden would raise the corporate tax rate from 21 to 28 percent" from USAtoday, would in your words "corporate tax increase that would more than reverse" a tax cut to corporations of "from 35% to 21%" Dalles News. To me that looks like a 2017 cut of 14% and a proposed increase of 7%. So a reduction in corporate tax rate of 7% since 2016.

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    Ray Salemi

    Why is the soon-to-be defunct legislative filibuster not mentioned?

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    Ray Salemi

    Disappointing analysis. Much more of an op-ed.

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  4. Merlin

    Biden's proposals come at a time that America has no choice, any more than FDR had any choice about if we entered WWII. The Republican program for 2020 is the same as their program for 2016 and we certainly can not afford that again.

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    Scarlette Tarte

    And why not? Conservative spend like crazy when they are in office. They don't care about the budget, the deficits, the debt. See - Trump et.al.

    Why in hell should the Democrats? Serious question that I want a REPUBLICAN to answer. Why do you hold the left to such double standards?

    If we win, we expect to enact our agenda, as it should be if we WIN. If we get the house AND the Senate and the presidency, that is a pretty strong signal to the right that Americans want something different than what YOU are offering. Might as well go with the flo.

    Besides, no presidency ever gets to enact everything it wants. So just stop with these scare articles.

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    Barry Alexander

    Politicians don't care about deficits, because voters don't. But if (when) the whole thing blows up in our faces, the politicians will get the blame. The politicians we elected.

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    David Chen

    And this is why I roll my eyes at home ownership. Why plant roots in such a fiscally reckless country?

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  8. Joe1776

    The answer to the question in the title is: Not if Trump wins.

    But otherwise yes he can. Even if republicans keep a narrow grasp on the senate - which seems unlikely anyway - he can pass it. People are looking more and more to government and every leader has an incentive to simply pass the buck.

    "Biden would also restore the pre-2017 tax rates for high-earning families (including phasing out the tax deduction for pass-through businesses), cap their tax deductions, and approximately double the top capital gains tax rate."

    The pass-through business tax cut was not for high earning families. He said he would not raise taxes on people making over $400k. But many small business owners do not make that much. Is he proposing all the small business owners lose the pass-through tax break or just those who make more than 400k?

    He said he would undo the 2017 tax cut so that would suggest he is going to start taxing small businesses again. But then he was saying he will not raise taxes on those making less than $400k. This seems a contradiction. Has he addressed this?

    "college, K-12 education, and preschool aid ($1.5 trillion)"

    The link you offer does not seem to cover college at all. The democratic platform says they will make State colleges "free." If so we can expect that enrollment in state colleges will shoot up and private colleges will take a hit. States will want to build more state colleges or expand the ones they have to address the demand. So it seems this will be very hard to guage but basically if we look at the percentage of private versus free public school in k-12 we might expect about the same split. It may even be worse because college is so much more expensive than k-12. And many people who might not have wanted to spend the money on college might suddenly find it is worth it. But lets say it would end up at about the same split. 85-90% of k-12 children opt for free public school. So what is the cost of 85-90% of Junior College, College and Universities?

    I certainly agree that even with Trump we need to get some sort of sane budget. But Biden is beyond completely insane and many of these costs are simply impossible to calculate.

    I wish republicans would focus on the fact that "free stuff" is not really "free." Its not the case that professors and others at state colleges will suddenly no longer need to feed themselves and their families. They will still expect to be paid for their work. It is political leaders holding you at gun point and saying you need to pay for other people's stuff. And here it will mean we have to pay for adults to take classes (in who knows what?) at State Universities.

    In the 80s people may not have been as educated as they are today but we knew promises of free stuff were bogus. The democrats backed off making those ridiculous claims for decades. Now I am saddened to see that despite more education the democrats have started talking about "free stuff" again.

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    Jonathan Crymes

    That the Republican Party governs as a party interested in fiscal responsibility only when they are *out* of power has been evident for many years. Indeed, I think all that's actually at play is that partisans and voters feel worried when people they don't agree with have the purse strings and that emotional reaction animates them to look for something substantive-sounding to express their worry like debt and deficits (liberals do it too). However, I'm not sure how relevant it is to take the hypocrisy of the GOP as a counterpoint to the author's concern over debt and deficits. It's fine to disagree with him! But all the comments pointing out GOP hypocrisy feel to me like they're responding to an argument the author never made. He's saying that Biden's taxing and spending proposals are bad. He isn't saying the GOP are responsible actors, at least not here.

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    rlritt

    According to the Cato Institute Trump is in line to spend 5.4 trillion in 2021. 11 trillion over 10 doesn't as bad.

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