Elections in the world's largest economy. Yes, we are talking about the US elections. But unlike previous elections, this one was a bit intense. As the american economics is going through the worst fallout in history. But the results are now out, and Americans have chosen Joe Biden as their president. So how President Biden would handle the American economics? Let's see.
The US economy is suffering from the Covid-19 pandemic. Both Trump and Biden had different plans for economic recovery. Trump was willing to lower taxes, promote a free market and reduce government spending. This tax cut is the continuation of the one introduced in 2017. On the other hand Joe Biden wants to increase taxation specifically targeting the big business, and high income earners. He wants to do this to increase government spending in sectors like infrastructure, education, and health care systems. By doing this Biden will be able to give money back to lower-income households indirectly. While in case of Trump more benefit was to the high income earners, as they pay more taxes. But you see in both the cases the timing of tax modification seems wrong. This because, when the economy was prospering in 2017, there was no need for a tax cut. And now in 2020 when all the businesses and individuals are in crisis, a tax hike doesn't make sense. As higher taxation could damage the businesses which are already struggling from the pandemic. But in the long term, when the economy gets stable, higher taxation will be required considering Government deficit, which is increased on record levels due to stimulus packages. So we have to see when Biden will increase taxes.
Now how will the job market under President Biden?
Well if you saw Biden's campaign. He has plans to invest the money which came from higher taxation. Biden has a $2 trillion infrastructure plan, it is estimated that it would create 1 million new jobs. Then plugging abandoned oil, and natural gas wells is estimated to create 250,000 jobs. Biden also promised a $700 billion manufacturing program. Which he estimates could create 5 million jobs by investing in American-made products. The Made in America program is already introduced by Trump. The White House is working on a plan where Manufacturing firms would receive a tax credit, for instance, if they expand their operations in the US, and hire more workers.
But still it is unclear how many companies will shift their manufacturing to the US. So it is hard to predict the creation of more jobs.
Now get to the trade.
Well it is unlikely that Biden will cancel the trade deal with China. But the trade uncertainties between the US and China might. As both, the republicans and democrats see China as an economic rival.
Yet Biden is likely to enhance the corporation with other allies like Canada, Germany, and Mexico. He could also push trade, and defence ties with Asian partners in order to counter the Chinese threat.
Now as you all must be knowing that the US is not a part of the Paris agreement. As the previous president withdrew the US from it. Well on the other hand President Biden is going to re-join the Paris agreement. And he proposed a $2 trillion investment in renewable energy. The plans are to make investments in new infrastructure, public transit, clean electricity, the electric vehicle industry and agriculture. This is actually a good thing, and would help the world fight climate change.
So on paper Joe Biden has made good promises. But only time will tell us how fast the US economy will recover, and how many of those promises are actually fulfilled.
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