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USA: Biden wants to dramatically expand the welfare state - the economy

USA: Biden wants to dramatically expand the welfare state – the economy

Experience shows that historical comparisons are often delicate matters – especially when a politician places himself in the gallery of his most important predecessors in office. However, in the case of the American Families Plan, now presented by US President Joe Biden, one cannot avoid the comparison with the legendary Franklin D. Roosevelt, the White House craves: a $ 1.8 trillion package of parents and moms. Child Benefits is arguably the largest program of its kind since the Social Security Act of 1935. Amidst recession, poverty and hunger, Roosevelt first offered some form of basic state protection to retirees, the unemployed, the disabled, and the bachelors. Parents, it was kind of the focus of the famous New Deal.

After 86 years, it is the turn of the families. For the first time in US history, the government wants to pay all parents a child benefit of up to $ 300 per month on a permanent basis, regardless of income. It complements the existing tax-free benefit, which so far has left specifically fathers and mothers who earn especially little. In addition, Biden wants to introduce up to twelve weeks of paid parental leave and abolish the often prohibitive fee for daycare for children between the ages of three and four. The two-year undergraduate course at a government community college must also be free. For the first time, employees who are sick themselves or who care for sick family members are guaranteed that wages will last for a limited period of time. All of this will be funded by large tax increases for the wealthy and tougher action by the tax authorities against tax fraudsters.

Child allowance, continuous pay and parental leave: what seems to be a list of social policy taken for granted in the ears of many Europeans clashed for a long time in the United States with this understanding of freedom, which for many citizens is the essence of the American social model: those Those who have the freedom to conceive their children according to themselves on the contrary, education as desired, choose a profession and get rich, so the thought should not call for the state if education fails, or the job is lost or the bank account is exposed. Even illness becomes a private affair, because the affected person may have lived brutally or not sufficiently devout.

Against this background, the Biden plan is nothing less than an attempt at widespread social democratization in which the United States is supposed to catch up with what has long been the norm in other industrialized countries. It is no coincidence that he began this attempt at a time when a terrifying pandemic was ravaging his country.

In times of crisis, the state can quickly turn into an inefficient, inactive and underfunded entity

In the United States, it was often extreme economic and social attitudes that made change possible in the first place. Just like the Great Depression of the 1930s or the unscrupulous hustle and bustle of the oil, steel and railway barons three decades ago, which, after looking the other way, has completely forced the state to create a modern antitrust law, which even today’s monopolists like Facebook are facing and still fear The Google. The fact that the window for reform may now open again is not least due to Americans’ experience with the hurricane KatrinaThe bank’s collapse in 2008 and finally the Corona pandemic: It made many citizens aware of how quickly the much celebrated “lean state” could turn into an inefficient, inactive and underfunded entity in times of crisis.

The example of the new child benefit illustrates just how skillfully Biden has used this citizen experience in his reform projects: It was introduced as part of the Coronavirus aid packages, but should expire soon according to previous planning. With the American Families Plan, the president is now preparing to convert an emergency aid measure into permanent social assistance. Overall, the war against the economic turmoil of the pandemic now serves Democrats as a welcome excuse to put up with sums that previously seemed unimaginable: If you were calculating the expenditures of Biden’s economic stimulus program for Corona, his infrastructure modernization package was introduced in March and the social reform that was It’s now planned, which adds up to six trillion dollars over ten years. That’s roughly five trillion – or 5,000 billion – euros.

What makes the entire project more politically explosive is the fact that large portions of the infrastructure and social reform package will be financed through tax increases. By doing so, Biden is not only stirring Republican opponents against him, but also some party friends, which is risky given the extremely heavy majorities in Congress: For example, Right-wing Democrat Senator Joe Manshin rejects Biden’s plan. For start-up companies, 28% instead of 21%.

Biden wants to close a tax loophole that is very popular with the rich

In addition, the president wants to raise the top tax rate for wealthy citizens from 37 percent to 39.6 percent today. Above all, however, the entire income tax rate should not only be applied to income from work, but also to investment income, which was previously imposed by the tax office at a special rate of only 20 percent. At the same time, Biden wants to close a tax loophole that is hugely popular with the rich: Until now, parents have been able to pass the securities on to their children without having to pay tax on the increase in value that arose out of the purchase. From the paper until the death of the testator. This privilege should no longer apply above the $ 1.5 million exemption threshold.

On the one hand, Biden does not want to fulfill his campaign promise to increase the inheritance tax itself – at least not for now. Because he knows exactly: even so, his reform plans will unleash a political storm in the country that will shake the home of capitalism. Rona McDaniel, the Republican leader and an ardent supporter of former President Donald Trump, has already set the tone: “Don’t blind the blind,” she told the citizens. Biden’s actions are “the actions of a party activist, not the actions of the president of all Americans.”