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(CNN) – Joe Biden’s incoming economic team will support the desperate hopes of millions of Americans who have lost their jobs, are facing eviction from their homes, or are starving in a monstrous COVID-19-induced recession.
But reviving growth and jobs after the pandemic may not even be the toughest challenge for the group, led by former Federal Reserve Director Janet Yellen, who the president-elect will formally appoint as Treasury Secretary on Tuesday. .
Biden made it clear in his campaign comments since he was elected and in the composition of his team that he intends to go back and fundamentally rearrange the economy in favor of working men and women – a goal. showing great ambitions but with dubious chances of success.
“This team is made up of respected and proven innovative public officials who will help the communities most affected by COVID-19 and address the structural inequalities in our economy,” Biden said, summing up their dual mission in a press release Monday.
Inequality, Biden’s challenge
Even before the pandemic, inequalities and the blocking of social mobility, especially in the post-industrial heartland of the Midwest and among blue-collar workers, were a defining feature of early 21st century politics.
The feeling that globalization has enriched the rich but has left the destitute underprivileged in the wake of the Great Recession was a driving force behind the populist nationalism spurred by President Donald Trump in his 2016 election victory.
Biden used his story of support for American workers and middle-class values to push oscillating states like Wisconsin, Pennsylvania, and Michigan off Trump’s election map on his way to the White House. But his presidency will rise or fall based on his ability to reduce inequality in a nation that spent the last Thanksgiving of the Trump era celebrating the Dow Jones Industrial Average that hit the all-time 30,000 milestone. This, even as long lines of people stretched out at food stalls in cities from New York to Dallas because they didn’t have enough to eat.
In the long run, Biden’s team, after two presidencies in which inequality has expanded despite the massive economic expansion that the share-owning classes have benefited from, must prove that promises to revive the middle class are Truly realistic in a world. globalized and are more than just slogans thrown by nostalgic politicians in the election campaign.
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Forge social change
The credentials of many members of Biden’s new team leave little doubt that the former vice president intends to deliver on his promises to American workers and restore the faith of the unions that have long supported his political campaigns.
Yellen began his professional life as a labor economist and has a reputation for trying to protect the most vulnerable from the worst economic crises. Cecilia Rouse, chosen by Biden to chair the Council of Economic Advisers, is also a labor economist and said she used discipline to forge social change.
In a magazine article Democracy In June, Biden appointed Neera Tanden as budget director, wrote that the pandemic had exposed the “moral distortions” of the US economic system.
“To mend what is broken and rebuild it stronger than before, we need a new social contract for the 21st century, one that updates the New Covenant,” Tanden wrote. “It is time to rethink the relationship, the basic treatment, between the individual, the companies and our government.”
The most immediate test Biden’s team faces is an already desperate economic situation that is likely to be far worse when he takes office on January 20, as the pandemic rages at the height of autumn and winter. Its resurgence – the closure of many restaurants and businesses that had struggled to recover over the summer – likely means the economy will struggle to grow and unemployment will rise during the first quarter.
Immediate test
Biden is in a similar position to when Franklin Roosevelt (FDR) was recently elected and waited months (inauguration was in March in those days) in 1932-33 to deal with the Great Depression while his predecessor, President Herbert Hoover – like Trump with growing covid crisis – was overwhelmed by the ongoing disaster under his command. But unlike FDR, there are no expectations that Biden will be able to pass nation-changing legislation to end the economic storm.
At best, if the Democrats somehow managed to win two ballots in Georgia in January, Biden would have a 50-50 Senate with Vice President-elect Kamala Harris drawing the votes in his own way. A Senate led by the Republican master of inertia, Senator Mitch McConnell, is the most likely outcome, which would make it more difficult to come up with a broad package of stimuli.
There are already signs that the Republican Party is rediscovering its zeal for fiscal discipline, after four years of indulgence in Trump’s policies that blew up the deficit, which typically occurs during recessions, at a time of economic growth.
Even a small short-term measure could help millions of Americans affected by waning government support for previous stimulus packages that have kept small businesses afloat, kept renters in their homes, and provided extended unemployment benefits.
“Half bread” is better than nothing
The Democratic Chamber and Republican Senate have been unable to agree on the size or composition of a new Covid-19 aid package for weeks. Trump’s absent leadership didn’t help.
The need is so acute that some Democrats have begun to tiptoe into unusual criticism of House Speaker Nancy Pelosi, who argues that Republican proposals do not provide the level or duration of support Americans need. .
Austan Goolsbee, senior economic adviser to the Obama administration, told CNN’s Manu Raju on Sunday that “the virus really is the head of the economy” and that there is a risk of a double recession.
If they have to accept half a loaf, then they should accept half a loaf. And then we try to take the other half. But right now it’s really touching, and I wish both sides could see it, “he said.
Possible agreement?
McConnell said Monday that it is still possible for an economic deal to take place in the last days of the old Congress, although his comments can also be interpreted as more poses.
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“We hope our colleagues at the top of the Democratic Party can finally listen to their members and stop blocking the multi-billion dollar common sense measures Republicans have been ready to implement for months,” the Kentucky Republican said. .
Biden has a history of making deals with McConnell and will take office with power vested in a newly installed president.
It will seek not only short-term help for the unemployed and closed businesses, but huge funding for the states neglected by the Trump White House.
He has ambitious plans for a new test and tracing system to slow down infections. States are asking millions of dollars to cover vaccination programs. By the time Biden is sworn in, many American children will have finished school for 10 months. And education officials still lack federal help to make their return to school safe.
However, Biden will have the advantage of being able to argue before Congress that a new economic package, while desperately needed, will be a bridge to better times in the near future, thanks to very encouraging news about the effectiveness of vaccines developed under the Trump Administration.
A more promising future
While long months of suffering, death and financial hardship follow, the Democrat will at least take office with the expectation that normal life will somehow resume by the middle of the year. If there is a burst of pent-up economic demand, it could enter a mid-term election year that often punishes first-term presidents who can argue that both have defeated the pandemic and saved the economy.
At that moment the second, more complicated part of the economic team’s work will begin: an attempt to reshape an economy that all presidents in modern memory have advocated is biased against the less well off, but that none has managed to rebalance.
Given the extreme short- and long-term obstacles to his agenda and the difficult political conditions, Biden probably could not have chosen a better candidate than Yellen, who, if confirmed by the Senate, will be the first female Secretary of the Treasury.
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The former head of the Federal Reserve (FED) is respected on both sides of the Capitol, a quality that will be important in forging a new stimulus agreement. His knowledge and good relations with the Fed will also be useful in maximizing the double blow that the Treasury and the central bank could use to revive the economy.
Yellen’s appointment was also welcomed by some progressives, an important consideration for keeping dissenting ideological groups in the Democratic Party together.
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