Biden’s Plan Encourages True Supply-Side Economics

A key to making America great again is the way a President runs and manages his government. The key to making America great again is the way a President runs and manages his government. National Review reported that Vice President Biden’s plan for the next 100 days would be an extension of the Obama administration.

The White House has given investors a warning about the economic repercussions of persistent high unemployment. Vice President Joe Biden, speaking at the Brookings Institution in Washington, D.C., Tuesday, issued a stark warning against a repeat of the “old-style supply-side economics” that President Ronald Reagan espoused in the 1980s. The White House’s latest economic blueprint, released Tuesday, calls for a sustained economic stimulus plan that would increase government spending on infrastructure projects, education, and research and development in the United States, while also promoting fiscal responsibility and tax cuts across the board.

In his new book, “Promise Me, Dad: A Year of Hope, Hardship, and Purpose”, Vice-President Joe Biden speaks about his decision to seek the 2012 Democratic nomination for president. The book, prepared with the help of his son Beau, chronicles the year that Biden spent preparing to run for the top job in the United States.. Read more about demand side economics and let us know what you think.

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Remember the supply side economy? It was a doctrine that claimed tax cuts (especially for the wealthy) would produce strong growth and more new revenue than was lost.

This is not the case, as evidenced by the Reagan and Bush tax cuts, according to a study by

William G. Gale.

и

Andrew A. Samwick

for the Brookings Institution. The initial results of Trump’s tax cuts show that they too have done little to stimulate growth. But some policies to increase aggregate supply and output growth are certainly in order. Some of them were even tax cuts. For example, there was every reason to believe that more generous depreciation for business equipment and machinery – part of the 2017 tax legislation – would lead to more investment and a higher capital stock. The results are indeed disappointing. The share of investment has increased, but not significantly.

But many of the most promising supply-side measures relate to public spending, including investment in physical infrastructure such as roads, bridges, ports and airports.

The argument for more public investment is essentially the same as the argument for more private investment: If the return is high enough, future profits will offset the initial cost, leaving the investor with some profit. All these arguments are reinforced by the current ultra-low interest rates, which reduce the cost of capital. Now is the time to invest in the future, both in the private and public sectors.

However, it is essential to choose the right projects. This means that we do not limit ourselves to physical investments such as factories and roads, as investments in human capital are the most profitable. Fortunately, much of President Biden’s jobs and families plan goes in that direction.

Let’s take two important examples: Early childhood education and paid holidays. We have known for decades that quality education for 3-4 year olds pays off. A comprehensive review of existing studies by the Council of Economic Advisors in 2015 concluded that the community could receive up to $8.60 for every dollar invested.

But you must be patient. It takes more than one generation to realize these major benefits, as many of them translate into higher incomes in adulthood. Sir, I want to thank you for your support. Biden’s proposal to create a national partnership with states to provide free, quality preschool to all 3- and 4-year-olds is likely to bear fruit after he leaves office.

Less attention is paid to paid leave for family and medical reasons, but it is an important part of Biden’s agenda. These measures clearly belong to the supply side measures, as they will increase the employment rate, especially for women. The pandemic highlighted the need for paid leave, as many people, especially women, had to give up work due to illness or to care for family members.

But the need existed long before the pandemic. The United States is the only industrialized country that does not guarantee its workers some form of federal paid leave. Paid leave is insurance against the adversity that millions of American families face each year. The feeder is sick. A child or other family member, perhaps an elderly parent, needs home care. There’s a new baby on the way. Mom or Dad will be on the air.

It’s a normal part of life. Some of these problems can be solved by making child care more affordable – also part of Biden’s agenda. But for many of them, someone has to stay at home, sometimes for weeks or months.

The good news is that the pandemic has made Congress aware of the need for paid leave. In 2020, he took emergency leave for two different Covid relief efforts. The bad news is that what little is left (tax credits from the US stimulus bill passed in March of this year) expires at the end of September. America needs something permanent.

Biden’s team proposes to phase in over a 10-year period a plan that provides at least two-thirds of the average weekly wage for up to 12 weeks of leave for family or medical reasons, up to a maximum of $4,000 per month. People will argue about whether these numbers should be higher or lower, but this plan is better than what we have now – which is nothing.

The greatest benefit to society would be the provision of quality pre-school education and paid leave for disadvantaged families. Wealthy families already make these investments themselves. These are the poor and near-poor who cannot afford a quality preschool education or cannot afford to live without a salary for a while.

Opponents of such programs often call them socialism. I like to say it’s a real supply side economy.

Mr. Blinder, a professor of economics and public affairs at Princeton, was vice chairman of the Federal Reserve from 1994 to 1996.

Potomac observation: Infrastructure negotiators are at an impasse because unions don’t want to give up the PRO Act. Image: Nicholas Kamm/AFP via Getty Images

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Appeared in print on 26. May 2021.

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