Bidenomics: Four Things To Watch For Financial Services


There are no easy economic fixes ahead when former Vice President Joe Biden takes office as president. Jobless claims are receding, but still stubbornly high. Vaccines are on the horizon to help usher in the end of the pandemic, once they become widely available (a process that could take months).

Congress is, at least insofar as it looks like now, going to be divided between a Democrat-led House and control of the Senate has come down to a highly-contested runoff for both Georgia offices. But as to what might be within the cross-hairs as the Biden administration takes shape, beyond the confines of battling the virus itself, we’ve identified four key issues to watch:

Stimulus: Thus far, with Donald Trump still in office, and with various stimulus proposals floating around the Hill, it remains to be seen when — or even if — we’ll see whether a stimulus pact can be hammered out before Jan. 20. But as The New York Times reported, with what Biden has termed a “dark winter” ahead shaped by the pandemic, he has stated that an economic stimulus package is necessary — targeting payouts to individuals, businesses and local governments. To that end, he has thrown his support for a $3.4 trillion spending bill that had been proposed by House Democrats back in May, and which has been stalled in Congress, specifically in the Senate (where Republicans hold the majority). That bill would echo, in part, past stimulus rounds, with $1,200 payouts to low- and middle-income individuals and families.

Taxes: Biden has also proposed rolling back some of the corporate tax cuts that had been a hallmark of the Trump administration, restoring the tax rate to 28 percent from the current 21 percent, and where the rate had been 35 percent before Trump’s own tax cuts in 2017. According to Investopedia, a Biden administration would also promote tax provisions to penalize exporting jobs overseas and would incentivize investments in infrastructure and green energy, transportation and manufacturing. Businesses would also see new tax credits, ranging from benefits to deal with potential layoffs to small business incentives to create retirement savings plans.

Supply Chains And High Tech: Delving into Biden’s “Build Back Better,” the president-elect’s plan for jobs and economic recovery, in a nod to reshaping supply chains Biden proposed a $400 billion investment focused on procurement to remake U.S. manufacturing, with an additional $300 billion focused on R&D efforts spanning electric vehicles to 5G and artificial intelligence (AI).

Banking, Too: Earlier in the year, Biden and U.S. Sen. Bernie Sanders (Independent of Vermont), called for the creation of a postal banking system. That initiative would foster joint efforts between the U.S. Postal Service and the Federal Reserve. The idea includes affordable bank accounts through the Fed, and the Fed also should create a real time payments system, “so families and individuals do not have to wait days for their checks to settle,” according to Biden’s site. Biden has also called for creation of the Public Credit Reporting Agency that would exist within the Consumer Financial Protection Bureau (CFPB). That agency, it’s been floated, would tap into nontraditional data sources such as utility bill payments as part of processes of helping would-be lenders in their decisioning activities.

There are other areas still taking shape within the Biden camp that will affect the financial services industry. Among them: student loan relief, middle class tax relief and increases in payroll taxes. However, these four areas have been consistently mentioned by Biden and members of his team. They will bear close examination as the transition process continues to play out.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.