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Financial policy: What to expect from the Biden, Harris administration

This historic inauguration is sure to usher change – here’s what it means for your money

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On Jan. 20, 2021 – exactly four years and more than 34,000 tweets later – the presidency of Donald J. Trump will come to an end, and Joseph R. Biden will be sworn in as the 46th President of the United States. With him, his running mate Kamala Harris will make history as the first woman of color to be sworn in as Vice President of the United States.

Biden faces a tough start to his presidency. The coronavirus pandemic, a nationwide vaccine rollout, high unemployment rates, racial tensions and the impeachment trial of his predecessor are just a few of the issues he will have to address in his first 100 days in office.

Here’s what you need to know about the immediate and long-term financial policy goals of the Biden-Harris administration heading into what is bound to be a historic inauguration day.

Immediate economic relief

Before looking down the road to what President-elect Biden’s economic policy will encompass, many Americans want to know what the new administration will do to help their immediate financial hardships.

See related: Coronavirus: What to do if you’re unemployed and have credit card debt

To help the millions of Americans who are struggling now, Biden has proposed a $1.9 trillion coronavirus relief package called the “American Rescue Plan” which will include an additional round of stimulus checks – this time up to $1,400 for eligible adults.

In addition to direct aid for adults and families, the relief package will also boost the current unemployment the federal government is subsidizing for the states from $300 to $400.

Along with direct financial assistance, the plan calls for $25 billion to be used in rental assistance programs and a nationwide halt on evictions.

Long-term financial priorities

Taxes

One of the most debated aspects of Biden’s financial agenda during the 2020 election cycle was his promise to raise taxes on the richest Americans, which his administration classifies as anyone who earns more than $400,000 a year. For individuals who earn over $1 million a year, the tax rate will increase to 39.6%.

Biden’s proposal also includes increases in capital gains taxes and the corporate income tax rate from 21% to 28%.

These increases may seem high, but there is a precedent for the rates. Before the Trump presidency, the corporate tax rate was 35% and the top income tax rate was 39.6%.

Unemployment

Unemployment is an issue that is at the forefront of millions of Americans’ lives due to the coronavirus pandemic and the vast economic downturn and layoffs that happened as a result.

In the spring of 2020, the United States saw a staggering 14 million jobs lost, increasing unemployment from 6.2 million to 20.5 million in May of 2020. While the unemployment rate has rebounded since May, over 787,000 Americans filed for unemployment the week before Christmas, showing that President-elect Biden has a major unemployment crisis to address when he enters office.

Biden’s “Build Back Better” plan pledges that the federal government will devote money to city and state governments so they can continue to pay frontline workers. Additionally, it will create new jobs in the immediate future, including contact tracing and vaccine outreach.

The Biden administration also plans to extend COVID-19 related unemployment insurance and “work-sharing” programs that have been adopted in 27 states. (Work sharing allows business owners to avoid laying off their employees with assistance from the federal government.)

Student loan debt

For those with student loan debt – or who plan to take on student loans – the Biden administration plans to launch initiatives that make higher education more affordable.

For instance, the Biden administration proposes making two years of community college accessible for students without incurring debt and making local and state four-year colleges free for all families that make less than $125,000 a year. Additionally, Biden wants to double the maximum value of federal aid like Pell Grants that help low-income students

These economic grants would also be available to the children of immigrants who were brought to the United States as DREAMers.

For Americans who have already graduated and are paying off student loans, the Biden administration has proposed increasing loan forgiveness programs for individuals who choose to work in areas of public service. For those who work in the private sector, Biden wants to make income-based loan repayment options more affordable and accessible.

Health care

Perhaps no issue is as universally relevant in 2021 as health care. In the United States, which has some of the highest rates of COVID-infection per capita, access to quality health care services will be top of mind for millions as Joe Biden is sworn in January 20.

The Biden administration has already announced its 100-day mask mandate to attempt to get COVID-19 numbers under control and has called for an immediate increase in both coronavirus testing and vaccination rates nationwide.

When it comes to health care costs and the Affordable Care Act, however, change may be slower coming. In 2021 a “normal” incoming Presidential agenda will have to be moved to the wayside in favor of the most immediate concern of getting the pandemic under control.

Biden has promised to defend and expand upon the ACA, with notable additions such as a plan to create a public option for insurance that is run by the government. This could be monumental for Americans who are struggling with high insurance costs in the private market, but it will have to pass a split Senate before it can become a reality.

Minimum wage

The current minimum wage of $7.25 in the U.S. has not increased since 2009. This means that wages have not kept up with inflation rates and the rising cost of living, which has led to nearly 40 million Americans and their families living in poverty despite working full-time.

To remedy this, Biden has proposed raising the federal minimum wage to $15 an hour, an idea that is supported by two-thirds of Americans according to a study by the Pew Research Center.

What does the new administration mean for your finances?

In a year packed with uncertainty as the world continues to fight a global pandemic, it’s hard to say what other relief measures might need to be considered in the early days of Biden’s presidency. The Senate’s busy agenda in the first 100 days of Biden’s term – including confirmation hearings for cabinet positions and the impeachment trial of President Trump – mean we might not see many of these proposed policies on the docket anytime soon.

See related: Biden proposal for public credit reporting agency faces uphill battle

Still, those struggling from a low minimum wage, large amounts of student debt or unaffordable health care might see some welcome changes during the next four years.

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