Biden heads to confrontation with Congress over how to repair the Covid-era economy

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“A large stimulus package is probably off the table,” economists Aneta Markowska and Thomas Simons of Jefferies LLC said Wednesday in a statement. They foresee a “meager” aid law worth around $ 500 billion, which will translate into 2021 economic growth of 4%, compared to 5.5% for a democratic campaign.

The biggest threat to the recovery, however, is not one that Biden can easily control through fiscal policy. It contains the virus as cases in the United States climb to new daily highs and countries including France and Germany resume lockdowns.

Biden said he is willing to close parts of the economy as justified to stop the spread, which would risk depressing growth. But it also supports more funding to reopen schools safely, which would allow parents to work.

To finance Biden’s proposals, the administration would increase the national debt by taking advantage of historically low interest rates. Biden spent decades in government warning of the dangers of budget deficits. But as president he will take on one of the largest in US history and has signaled that he is in no rush to downsize it.

Biden has proposed raising corporate taxes from 21% to 28%, increasing income taxes for those earning more than $ 400,000 and taxing capital gains the same way as normal income for the highest earners. A divided Congress, however, would create major obstacles to such moves.

The campaign outlined a $ 3.5 trillion economic program to fund its key goals: