Previewing Biden's Plan

 #293: I Review What's On Offer

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According to Jeff Stein, a reporter for the Washington Post, Joe Biden, in a recent Michigan speech, laid out his priorities for 2021.  I reconfigure his reporting:

+ Increase Capital Gains taxes on the wealthy

+ Corporate tax rate 21->28%

+ Increase income taxes on +$400K earners

- Infrastructure / clean energy plan 

- Free preschool and community college

- Affordable childcare

- Public option, subsidies for ACA

- Require feds buy US products

- $15 minimum wage

This seems about right.  Not too ambitious, which might scare off middle-of-the-road voters; but not too weak, which would fail to energize the Democratic base.

Keeping the details under wraps ("affordable" childcare, for example) avoids the criticism of being unrealistic, while still exciting potential voters.

The Biden campaign no doubt has a sense of the politically possible, and for all I know they have plans to introduce additional initiatives in their 'first 100 days', but, there's one idea that's so likely to galvanize public support for Team Biden that it's worth mentioning: Baby Bonds.

Everybody likes babies.  Everybody likes the idea of an even playing field.  We'd all be relieved if inequality were receding in the rearview mirror.  And everybody would welcome a program that partly paid for itself in less safety net spending.

Here's a thumbnail sketch:

* On a sliding scale (from $0 to $2,000, based on family income), money is placed in a bank account every year for every American child.

* Compound interest (@3%) further increases each account, so that once 18 years old, a child from a low-income household would receive something like $50,000.

* A windfall at age 18 (to be used for either college, a down-payment on a house, or a business start-up) is what, if anything, will allow those with little chance at success a solid first step up.

* The fact that it helps all low-income families, means that envy ("They got it, but we didn't!") isn't a problem.

* The price tag is surprisingly low for such a comprehensive solution, at a mere $60 billion a year.  Though, of course, that's a lot of money.  On the other hand, an economy that gives everyone a chance would do wonders for the nation's bottom line (future tax receipts) not to mention all the avoided disfunction. 

* A few questions.  If begun in 2021, does the nest egg only kick in in 2039?  That's a long way off.  Could things be phased in?  If so, the idea would be incredibly popular, since it wouldn't cost much to begin with.  Without a phase-in, it's certainly understandable why the Biden agenda hasn't included what would otherwise be a no-brainer.   So, maybe a gradual phase-in, starting with $200 a year for all 5-year-olds, with 2034 the first year for payouts.

* Here's the math for a plan that would increase payments by $200 per year, from 2021 until 2030, when each account would receive $2,000 a year:

Cost (excludes each child's $1,000 at birth)

2021: (Approximately 3% of $60 billion) = $1.8 billion

2022: $5 

2023: $8 

2024: $12 

2025: $17 

2026: $23 

2027: $28 

2028: $35 

2029: $42 

2030: $50 

2031: $53 

2032: $56 

2033: $60 

2034: Begin Payout 

Payouts: 2034 through 2040

Born in 2016:  $20,00 plus compound interest

Born in 2022:  $31,800 plus compound interest

Payouts: 2041 on: $39,000 --> ($49,936 with compound interest)

These figures are based on a plan put forward by Sen. Cory Booker (see link, above).