4 Key Economic Takeaways From the State of the Union Address

President Joe Biden used his State of the Union address Thursday night to lay out his economic vision for a second term ahead of the 2024 presidential race and tout policies he said could bring down prices for Americans.

During his address, he spoke on several economic issues, from home ownership to taxes to healthcare costs to jobs. Here are four key points from Biden’s speech.

Biden Says Job Growth is Powering the Economy

Biden praised the strength of the U.S. economy, saying it created 15 million new jobs in three years, accelerating the recovery from the 2020 pandemic.

In addition to touting historic growth for Black and Hispanic workers, he said the passage of the CHIPS and Science Act has helped spur more U.S. manufacturing, creating 800,000 domestic jobs. He noted that some of these jobs paid six-figure salaries and didn’t require a college degree. 

Proposals Would Cap Health Care Costs

The Inflation Reduction Act gave Medicare the power to negotiate prices on a handful of prescription drugs. Biden said he now wants to expand that power to cover 500 drugs. 

“Americans pay more for prescription drugs than anywhere in the world. It’s wrong and I’m ending it,” he said. 

Biden also proposed other caps on drug prices, including extending the $35 cap on the cost of insulin to all Americans, not just those on Medicare. He also proposed a $2,000 annual cap on prescription drug costs, extending to all Americans a program that will soon be available to seniors on Medicare. 

Biden also spoke about eliminating hidden “junk fees” in bills, touting new rules that capped most credit card late fees at $8, from the $32 average now charged. He said the change would save Americans $20 billion a year. 

More Tax Credits for Homeownershp

Earlier Thursday, Biden proposed a new first-time homebuyer credit of $10,000, as well as a second credit of $10,000 for homebuyers who sell their starter home. During the State of the Union, he unveiled other ideas for helping move a housing market that has been struggling under limited supply and high prices. 

“I want to provide an annual tax credit that will give Americans $400 a month for the next two years as mortgage rates come down to put toward their mortgage when they buy their first home or trade up for a little more space,” he said. 

Another measure Biden said he would pursue would be to eliminate title insurance on federally backed mortgages, which he said could save homebuyers $1,000 or more in fees. 

Biden also said his administration had cut “red tape” for builders that helped get federal financing to build 1.7 million affordable homes. 

Extend Tax Credits, Make Tax Code More Fair

One of Biden’s priorities in the coming year is to extend tax credits that are set to expire in 2025 that he said saved taxpayers $800 a year. He said he is looking to make those credits permanent.

Biden also railed against the taxes paid by corporations and billionaires. 

“Folks at home, does anybody really think the tax code is fair?” Biden asked. “Do you really think the wealthy and big corporations need another $2 trillion in tax breaks? I sure don’t.”

Nobody making less than $400,000 will pay an “additional penny in federal taxes,” under Biden’s plan, which would raise taxes on businesses and the ultra-wealthy, he said. Biden pointed to the minimum 15% federal tax that corporations pay, arguing that it should be raised to 21%. He also said the average federal tax rate for billionaires is 8.2%, arguing for a minimum tax of 25%.

“No billionaire should pay a lower federal tax rate than a teacher, a sanitation worker or a nurse,” he said.