Now that Joe Biden has become the presumptive Democratic nominee for President, he is setting the stage for the general election. Normally, party nominees ‘move to center’ after getting the nomination in an attempt to appeal to independent voters who, in the case of Democrats are not as liberal as the party base of voters or, in the case of Republicans are not as conservative as the party base. This year, Biden’s political calculations appear different.
Bernie Sanders and, to a lesser degree, Elizabeth Warren pulled the Democratic Party to the far left and Biden seems to be worried about keeping their voters energized.
Over the weekend, Biden announced two new campaign positions. The first related to changes to Medicare. While running for the nomination, Biden was against so-called ‘Medicare for All’ plans of Sanders and Warren, which was their version of nationalized healthcare. In the last few days, Biden has changed somewhat and announced he wants to expand Medicare coverage and move the age for eligibility down to 60 years of age. In one sense, this would be more fiscally expensive because he is proposing to expand government healthcare to an older population, which tend to have more expensive health needs, but not to expand it to the younger population who are generally healthier and would ‘offset’ some of the per person costs.
Biden also came out in favor of canceling student debt. Thinking Man has never completely understood the rationale for cancelling student debt vs. any other kind of debt. What makes student debt worse than any other kind of debt-housing debt or consumer loans, for example. But I digress.
Biden’s proposal is on top of the freeze on interest and payments that was already put in place in the pandemic relief package recently passed into law. Nothing related to the pandemic, just a general relief of debt for students. He proposes to pay for it by cutting funds in the pandemic relief bill for businesses who are impacted by the virus and trying to maintain jobs.
Even before recent events, Biden’s two new proposals would cost hundreds of billions of dollars. On top of the pandemic relief efforts which is expected to exceed $2.3 trillion, this is massive new spending that will increase the US debt and force an increase in taxes just as the economy will be trying to recover. Even if all this new spending was a good idea, it certainly seems that now would not be the best time to go further into debt. But he’s clearly worried that Sanders’ supporters won’t turn out and vote for him, and so political calculations require him to pander to the left-wing of his party. And that’s too bad for an economy that will be trying to recover from the biggest economic crisis since the Great Depression.