Trump or Biden? Big impact looms on state budget, health care, immigration
Billions of federal dollars for Mass. could hinge on presidential election results
AS VOTERS ACROSS the nation wait eagerly for the results of Tuesday’s presidential election, here in Massachusetts the race could have major trickle-down effects.
In addition to the question of whether any Massachusetts politicians might jump to a Biden administration – Sen. Elizabeth Warren is reportedly lobbying Biden to become treasury secretary – there are major policy implications. The biggest short-term impact is likely to be whether the state can expect another influx of coronavirus relief money. In the longer term, the starkly different policies on immigration, taxes, and health care of President Trump, a Republican, and Democratic former Vice President Joe Biden could mean vastly different outcomes for the Bay State.
Should Biden win, the state is more likely to see a greater influx of federal money, both from coronavirus relief and from various programs in health care, housing, and transportation. Trump’s immigration policies that have hurt the state are likely to be scaled back. But Biden’s proposals could also lead to the imposition of a tax policy that could hurt wealthy residents and a health care proposal that could mean less money for health care providers, a key sector here.
Should Trump win, some immigrants could lose legal status and the Affordable Care Act may be further scaled back. There is unlikely to be a major tax hike. While the state will likely get some coronavirus relief money, it is unlikely to see as large a budgetary windfall as under Democratic control.
Evan Horowitz, executive director of the Center for State Policy Analysis at Tufts University, estimates that if Democrats in Congress get their way and a massive economic stimulus bill dedicates over $400 billion in federal aid to state and local governments, Massachusetts could get around $8 billion. “We’re talking about really big numbers,” said Horowitz.
Massachusetts has plenty of needs for money: to buy personal protective equipment, provide housing assistance, pay for unemployment benefits, or avoid drawing down the “rainy day” fund. But whether Democrats get their bill depends in large part on which party controls the White House and the Senate come January. Republicans have been more reluctant to send large sums of money to state governments.
“In a world where Joe Biden is president and Democrats control the Senate, there’s likely to be a substantial round of second stimulus, including aid for states,” Horowitz said. “That really changes the complexion of Massachusetts’s economic situation overall and the state budget.”
But longer term, a Biden presidency could also have a potential downside for some residents.
Biden’s tax plan would raise taxes by an estimated $2.4 trillion over a decade, according to a Tax Policy Center analysis, with almost the entire burden falling on wealthier taxpayers. The top 1 percent of taxpayers, those earning more than $790,000 a year, would pay, on average, $265,000 more in taxes each year, according to the center.
Because Massachusetts is a wealthy state, with high salaries and a high cost of living, more people would be hit with these tax increases than in other states.
Biden has also talked about raising the corporate tax rate.
Another major difference is in one of the hallmarks of Trump’s presidency: his restrictive approach to immigration. In addition to taking a harsh approach against illegal immigration, Trump’s changes have limited the availability of visas to international students and skilled workers, limited numbers of refugees and asylum seekers, delayed citizenship applications, and jeopardized the legal status of residents in the US on temporary protected status programs. Businesses in Cape Cod have reported difficulties getting seasonal workers due to changes in visa rules. Colleges that depend on international students for tuition revenue are worried about a drop in international students.
There are more than 12,000 Massachusetts residents with Temporary Protected Status, who face conditions in their country that make it unsafe to return, and around 5,400 protected from deportation under DACA, an Obama-era program that lets individuals brought to the US illegally as children become eligible for a work permit. Trump tried to curtail both programs, although his orders are held up in court. These individuals’ future status could hinge on which party controls Congress and the White House.
Michael Goodman, co-editor of the MassBenchmarks economic journal and acting provost and vice president for academic affairs at the University of Massachusetts Dartmouth, said immigration is also important in Massachusetts because the state’s recent population growth, which is necessary to sustain the economy, has relied on foreign-born immigration rather than migration from other states or birth rates.
On health care, beyond the differences in how each candidate would address the raging coronavirus pandemic, differing policies could have outsized financial impacts on Massachusetts, which has a huge health care industry. A case currently before the Supreme Court will decide whether to overturn the Affordable Care Act – the law passed while Biden was vice president, which Trump opposes.
While Massachusetts established its own form of universal health care coverage before the ACA was passed, it was able to expand subsidized coverage under the ACA and receive federal money for that expansion. If the ACA is repealed and Massachusetts can restore its earlier program, the Blue Cross Blue Shield of Massachusetts Foundation estimates that 40,000 people would lose health insurance and federal health care funding for Massachusetts would shrink by $1.4 billion a year.
Trump has also talked about moving Medicaid to a block grant program, a change in the funding formula that would lead to Massachusetts losing money.
While the Trump administration has funded Medicaid at higher levels during the pandemic, Joshua Archambault, senior health care fellow at the free–market Pioneer Institute, said there have been conversations among GOP health officials about tying future influxes of Medicaid dollars to long-term structural reforms, which could affect things like eligibility for MassHealth, the state Medicaid program.
Biden wants to create a public option in health care, allowing individuals to buy a public insurance plan similar to Medicare. Archambault said if a significant number of people move from commercial health insurance to government health insurance, this will likely hurt hospitals and doctors, since government programs reimburse providers at lower rates than commercial insurers.
On environmental issues, the federal government under Trump has delayed the rollout of offshore wind projects in Massachusetts, jeopardizing the ability of the new industry to grow along the eastern seaboard. “An end to those delays would have a positive economic boost to the state, especially southeastern Massachusetts,” Goodman said.
There is also the question of what programs each administration would prioritize. Many believe Biden’s funding priorities will be more in line with state priorities.
For example, Biden has been a strong supporter of public transportation, so it could be easier for Massachusetts to get money for MBTA projects under a Biden administration. Public transportation tends to be concentrated in Democratic-controlled regions, like the Northeast, and Trump has repeatedly talked about not wanting to subsidize “blue states.”
Biden has talked about turning the Section 8 housing program – which gives rental vouchers to low-income families – into a universal one, where the current cap on vouchers is eliminated and anyone who is eligible for a voucher can get one. In a state like Massachusetts with high housing costs, that could help large numbers of low-income residents.State Sen. Sal DiDomenico, an Everett Democrat and vice chair of the Senate Committee on Intergovernmental Affairs, said various forms of federal welfare benefits, childcare assistance, food assistance, educational grants, and housing vouchers could all be affected by federal funding and policies.
“All the things Donald Trump publicly railed against and publicly said he doesn’t want to do are all up for grabs again, and every federal dollar means something for each person in our state,” DiDomenico said. “It would be political suicide to touch these things now when you’re running for reelection. But when you win a second term as president, you don’t have to worry about running for reelection.”