Signum Global Advisors
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US: A fresh reminder that Biden won’t be beholden to the Progressives
 

 

July 9, 2020
 

Charles Myers

Chairman


Lew Lukens
Senior Partner
  Key Takeaways  
   
 
 
  • In May Democratic candidate former Vice President Joe Biden and his primary rival Senator Bernie Sanders unveiled “unity task forces” that would meet to craft Democratic Party positions on key policy issues. The task forces released a 110-page report this week.
  • The report is very aspirational; it pays lip service to some of the party’s more progressive ideas, though has few specifics about how ideas will be achieved, and generally repeats most of the moderate ideas from the Biden campaign’s website.
  • Following is a look at proposals in some key areas, most of which, including on tax policy, we have written about previously.
 

Our view:

  • The just-released Unity Task Force report lays out a wealth of proposals intended to guide a Biden presidency’s policies in key areas. The report’s most surprising takeaway is its moderation. Many of the Democratic Party’s more progressive ideas are not included.
    • There is no mention of a Green New Deal.
    • Medicare for All did not make the cut.
    • Legalization of marijuana, pushed by progressives, was not included.
      • The result represents a very successful effort by Biden and his team to control the narrative and policy direction, while making just enough concessions to the progressive wing to avoid an open rift in the party.
    • These recommendations do not represent formal Democratic Party positions; they are intended to inform the Democratic Party platform which will be unveiled next month at the party convention.
    • We will monitor these policy debates closely, especially as the convention approaches and final positions clarify.
 
  • The economy and taxes:
    • On general economic policy, the report lists reliable Democratic policies like a national USD 15 minimum wage, a reformed unemployment insurance system, paid family leave, and the repeal of “Right to Work” laws. Trade policy will focus on labor, human rights, and environmental protections. A Biden administration will support US manufacturing and “end policies that incentivize offshoring.”
    • The tax policies put forward in the report a similarly light on details. The plan calls for:
      • Ensuring the wealthiest Americans shoulder more of the tax burden.
      • Making investors pay at the same rates as workers.
      • Ending expensive and unproductive tax loopholes.
      • Raising the corporate tax rate.
      • Expanding payroll taxes on upper-income taxpayers to fund more generous Social Security benefits.
      • Returning estate taxes to their historical norm.
    • Tackling corporate concentration: a Biden administration will direct federal regulators to review all mergers and acquisitions that occurred during the Trump presidency, prioritizing the pharmaceutical, health care, and agricultural industries to see if corporate activity has increased market concentration, raised prices, harmed workers, or reduced competition. The administration “will consider” breaking up corporations. No mention of big technology companies.
    • Banking: The report proposes the following reforms to the banking system:
      • Support and encourage Congressional efforts to expand access to affordable banking, including short and long-term loans and better banking services to communities so they do not have to rely on predatory lenders.
      • Fed accounts: Everyone should have an affordable bank account and believe that the Federal Reserve can play that role. The Federal Reserve should create a real-time payment system, so families and individuals do not have to wait days for their checks to settle.
      • Postal banking: Government should provide easily accessible service locations, especially postal banking to make it possible for everyone to access physical banking locations.
      • Wall Street: Maintain and expand safeguards that separate retail banking institutions from more risky investments. Strengthen and protect Dodd-Frank provisions.
      • Strengthen oversight of consumer lending, including credit cards (as required by Dodd-Frank), through the CFPB and enforce remedies for abusive or deceptive practices. Require transparency on rates charged by ZIP code.
 
  • Pharmaceuticals: As we have written in the past, a Biden administration will seek legislation to enable Medicare to negotiate directly with pharmaceutical companies. Biden will limit drug price increase to inflation and seek to eliminate corporate tax breaks for drug advertising. Here are some of the more salient ideas:
    • Empower the HHS Secretary to negotiate prices that are capped to a level associated with average OECD median prices.
    • Limit cost inflation for all brand name drugs and abusively priced generics to the consumer price inflation rate.
    • Enforce negotiation and associated price limits through tax penalties.
    • Use antitrust authority to challenge mergers that lessen generic competition.
    • Allow individuals to import high-quality and safe prescription drugs.
    • Prohibit the continued taxpayer underwriting of pharmaceutical advertising.
 
  • Climate change and energy: Addressing climate change and promoting clean energy are themes woven throughout the report. The report focuses on protecting public lands and waters, addressing the adverse effect of climate change on underprivileged communities, and greatly expanding use of solar and wind energy.
    • The report briefly discusses the fossil fuel industry. It does not mention fracking. If adopted, the plan will:
      • Aggressively reduce conventional and greenhouse gas pollution, including through the regulation of oil and gas.
      • End overseas coal financing.
      • Repeal fossil fuel subsidies.
      • Decrease methane emissions.
 
  • Student Debt Reform: The plan includes detailed ideas for alleviating student debt burden. We include this because if successful, the actions proposed could have a stimulative effect on the US economy.
    • Immediate COVID debt relief of up to USD 10,000 per borrower.
    • For recipients of federal loans, pause monthly billing and stop interest from accruing for borrowers making less than USD 25,000/year.
    • For borrowers making more than USD 25,000/year, cap payments at 5% of discretionary income.
    • All student loans forgiven after twenty years.
    • An expanded public service loan forgiveness program of up to USD 10,000/year for five years.
    • Allow student loans to be discharged in bankruptcy.
 

Author:

Charles Myers

Chairman
Washington, D.C. Office
charles@signumglobal.com
+1.917.971.5600

 

Lew Lukens

Senior Partner
lew@signumglobal.com
+44(0)7444 460614

 
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