4 Changes Biden Wants to Make That Could Cut Your Debt

Joe Biden's proposals are designed to help low- and middle-class Americans find their financial footing.

Paying off debt hinges, in part, on bringing in more money than you spend. Toward that end, here are some of the changes proposed by current presidential candidate and former Vice President Joe Biden. These may help you hold on to more money each month and minimize the amount of debt you take on.

1. Reduce medical expenses

A 2020 Northwestern Mutual study found that nearly 8 in 10 Americans (79%) report feeling some level of anxiety about the rising cost of healthcare in the U.S. In response to that anxiety, Biden proposes allowing Americans to spend less on medical care and keep more of their hard-earned income in their pockets. Here are a some of Biden's proposals regarding the issue:

• Insure more than 97% of Americans by stopping the GOP effort to reverse progress made by Obamacare and building on the Affordable Care Act.
• Give Americans the option to choose between their private insurance company and a public health insurance plan.
• Lower premiums for those who struggle to make those payments by raising the value of tax credits.
• Expand coverage to low-income Americans, regardless of their state politics. For example, governors and state legislatures in 14 states have refused to take up the Affordable Care Act's expansion of Medicaid eligibility due to partisan issues. Biden plans to change this by offering premium-free access to the public option for 4.9 million Americans who would be eligible for Medicaid but are blocked by their state from accepting coverage.
• Help middle-class families pay for coverage by providing tax credits.
• Double America's investment in community health centers.
• Decrease medical costs and increase quality of care by aggressively tackling market concentration across the healthcare system. In other words, make it impossible for the concentration of market power to be in a few corporations' hands.
• Get the abuse of power by prescription drug companies in check by repealing the current exception that allows drug companies to avoid negotiating with Medicare.
• Limit launch prices for drugs that face no competition, as these prices are often arbitrarily set and abusive.
• Allow consumers to buy prescription drugs from other countries to help foster competition and drive down outrageous drug prices.
• Discontinue pharmaceutical tax breaks for advertisement spending.
• Improve the supply of quality generic drugs.

If your monthly health insurance premiums and out-of-pocket payments are digging into your budget, Biden's plan could help your bottom line. And if you are among the estimated 79 million Americans dealing with medical debt, Biden's plan could help you rest better at night.

2. Increase the child tax credit

In an attempt to reduce childhood poverty rates, Biden proposes expanding the child tax credit. This anti-poverty program would allow families who would otherwise fail to qualify for the tax credit to recoup some of the funds required to raise a child. Currently, parents can claim a $2,000 credit for each child 16 or younger. Biden wants to increase the tax credit from $2,000 to $3,000 per child for children ages six to 17. For children under the age of six, the credit would jump to $3,600 (in an attempt to help offset the high cost of childcare). In addition to raising the credit amount, the upper age limit moves from 16 to 17 years of age. Biden wants the credit to be fully refundable, meaning families could receive it in monthly payments rather than having to wait to file their tax return the following year.

The enhanced tax credit would be in effect for 2021, then only last "as long as economic conditions require" it. In short, it's a short-term measure designed to help families as the country emerges from the coronavirus pandemic.

Joint filers with an income of $400,000 or more and single (or head-of-household) filers with an income of $200,000 or more will miss out on the credit. If your income is below those thresholds, this enhanced credit could help you keep money in the bank.

3. Offer an upfront first-time homebuyer tax credit

Despite the devastation of COVID-19, the housing market is smoking hot. Mortgage rates are hitting record lows. Unfortunately, many first-time homebuyers cannot come up with a down payment. To help those folks buy their piece of the American Dream, Biden has outlined a $640 billion housing plan, including an advanceable tax credit of up to $15,000 to help families offset the cost of getting into a home. "Advanceable" means that homebuyers will receive the tax credit at the time of purchase, rather than waiting until they file their taxes the following spring.

If you are among the millions of Americans hoping to buy a home but are unsure how you will scrape together a down payment, Biden's plan may be your ticket to homeownership.

4. Create new jobs

It's no secret that Biden is a big fan of green energy, one component in fighting climate change. On his website, Biden says that if his plan is strategically executed, his administration's response to climate change could create 10 million well-paying jobs in the United States and build a more-inclusive middle class. Suppose Biden does manage to create 10 million new jobs, a majority of which will be available to those without college degrees. That fact alone could help millions of unemployed Americans find well-paying, long-lasting careers.

Having access to more money is the first step in cutting your debt. If Joe Biden wins the upcoming election and gets his way, you may find yourself able to spend less, save more, and ultimately, cut your debt burden.