What should change with the new President elect Biden

17th November 2020
-IAM, News

Hugues Chevalier, Economist

Although official results from last week election have not yet been published, the new President elect, Joe Biden, is already organizing his new administration. On the economic side, the ‘democratic’ program will become reality. Here are the main elements of this new economic policy. First, in order to finance the stimulus plan (not yet approved) of USD 2000 billion following the pandemic crisis and to consolidate public finances, the new administration would increase the taxes for both the companies and individuals. Tax on corporate should be increased from 21% to 28% (which has been lowered from 35% to 21% by the Trump administration). Further to this, income tax for households, with income of more than 400 000 USD, should be increased from 37% to 39.6%. The new team will also take care of the relations with the main US trade partners. The ‘trade war’ with China should continue, but it should not get worse. With Europe, the situation should improve quickly, but a free trade agreement would not be signed immediately. Regarding the climate change policies, the objective is for the US to be carbon neutral by 2050. That means huge investments in the renewable energies and part of the stimulus plan will be used to speed up these reforms. And, then, the automotive sector will have to continue to develop quickly their conversion into electric motorization. The economic policy of the new administration will indeed take definitively a U turn. But the speed of these reforms will depend on the majority that this government will get at the Senate.