Biden’s Economic ‘Unfinished Business’ Takes Center Stage In Election

Key Takeaways

• As President Joe Biden’s Administration enters its final months, White House economic advisors say he has yet to address two crucial policies for household finances.
• The chair of the White House Council of Economic Advisors said housing and childcare expenses are two of the most pressing issues for households.
• Kamala Harris and Donald Trump are proposing policies to address soaring childcare and housing costs.

President Joe Biden’s administration has left at least two major economic problems festering, and both Kamala Harris and Donald Trump are touting plans to address them.

Biden and White House officials are quick to point out the bright spots of the economy under his presidency—restoring the jobs lost during the pandemic and then some; inflation falling back to near pre-pandemic levels, and a reduction in drug prices for Medicare recipients. But Biden was never able to get major legislation passed addressing two of the biggest financial burdens on American families: soaring costs for housing and child care.

In an interview last month with Investopedia, Jared Bernstein, chair of the White House Council of Economic Advisors, highlighted those issues as the economic problems most in need of government intervention.

“I would say the 15-year build-up and the shortage of affordable housing is one of the biggest pieces of unfinished business we face,” Bernstein said. “And of course, there are too many people that spend too large of a share of their income on child care.”

Home prices have risen more than 50% since the pandemic began, putting home ownership out of reach for many people and creating a ripple effect of economic problems, including preventing people from moving to get better jobs.

Child care is an even more daunting issue for families who must pay for it. Sending two children to daycare was typically more expensive than rent across the country last year, according to an analysis this spring by the advocacy group Child Care Aware.

Both major presidential candidates have proposed policies addressing those problems. 

Harris on Child Care

To offset child care costs that are increasing faster than overall inflation, Harris has adopted and expanded upon one of the Biden era’s most effective anti-poverty measures: expanding the child tax credit.

In speeches and a policy paper, Harris has proposed expanding the credit to a maximum of $3,600 per child per year from its current level of $2,000, matching a temporary policy Biden put in place in 2021. Biden’s later efforts to make the change permanent ran aground in the Senate, torpedoed by opposition from Republicans with help from Democratic senator Joe Manchin.

Harris would take the idea a step further, raising the credit to $6,000 for parents of children younger than a year old.

She has also said she would take other measures to “lower the costs of high-quality child care and preschool for working families” though has not offered more detailed plans. The Biden-Harris administration had previously proposed offering free universal pre-school, and capping families’ child care costs at 7% of their income. 

Trump on Child Care

The Trump campaign, through his running mate JD Vance, has proposed a credit of $5,000 per child. As president, Trump signed legislation expanding the existing credit to $2,000 per child from $1,000. 

Trump himself has offered few specifics. When asked last month what child care legislation he would support, Trump replied that child care was “something you have to have in this country” but didn’t elaborate on a plan.  

Trump on Housing

Trump’s housing policies would involve deregulation and using federally owned land.

Trump and Vance have said immigrants have stoked competition for housing, driving up rents and home prices. Trump said he would order police and the military to deport millions of immigrants, which could reduce demand for housing and give landlords and home sellers less bargaining power.

Homebuilders, however, say mass deportation would remove much of their workforce, slowing the pace of building and worsening the nation’s long-standing housing shortage.

Trump also said he would take advantage of a little-used federal asset—the massive amount of land that it owns—to tackle the housing shortage. He laid out the idea last month in a speech at the Economic Club of New York.

“We will open up portions of federal land for large-scale housing construction,” Trump said. “These zones will be ultra-low tax and ultra-low regulation.”

Although the federal government owns more than a quarter of the land in the United States, most of it is inhospitable mountain and desert terrain in the western part of the country, or is being used for national parks, wildlife refuges, or military bases.

Trump has also said he would undo Biden-era rules that encourage municipalities to build affordable housing, calling the policies a “war on the suburbs.”

Harris on Housing

Harris has emphasized housing in her economic agenda, pledging to build an additional 3 million homes to cover what Moody’s Analytics estimated to be a shortfall of 2.9 million affordable homes relative to demand.

Harris said she would get this done largely by offering carrots to builders and local governments in the form of tax credits. In addition to creating a $40 billion “innovation fund” to incentivize affordable home construction, Harris said she would offer tax credits to builders who construct or renovate affordable housing and reduce red tape that blocks the construction of new houses.

Housing economists say local zoning regulations, which restrict the number of homes that can be built where, are a major reason for the nation’s simmering housing shortage.

Harris has also promised to create a $25,000 credit for first-time homebuyers, an idea that’s gotten a mixed reception from economists—some have raised concerns that it would put upward pressure on home prices, while others have said it would target a small enough group of people that it would avoid inflating prices.

Read the original article on Investopedia.