Joe Biden’s incoming economic team will shoulder the desperate hopes of millions of Americans who have lost jobs, face eviction from their homes or who are going hungry in a monstrous Covid-19-induced slump.
But reviving growth and unemployment after the pandemic may not even be the toughest challenge facing the group, headlined by ex-Federal Reserve Chair Janet Yellen, whom the President-elect will formally nominate Tuesday as treasury secretary.
Biden has made clear in his comments on the campaign trail, since he was elected, and in the make-up of his team, that he intends to take a swing at fundamentally reordering the economy in favor of working men and women – a goal that shows huge ambition but comes with dubious chances of success.
“This team is comprised of respected and tested groundbreaking public servants who will help the communities hardest hit by Covid-19 and address the structural inequities in our economy,” Biden said, summing up his dual mission in a press release on Monday.
Biden’s agenda for his first 100 days in office will, according to both those close to him and outside groups in contact with his top aides, center on two key avenues of action: the passage of a broad economic aid package and, where legislation is not necessary, a series of executive actions aimed at advancing his priorities. Containing the Covid-19 pandemic, launching an economic recovery and tackling racial inequality are his most urgent priorities, transition officials told CNN.
Even before the pandemic, inequalities and blocked social mobility, especially in the post-industrial heartlands of the Midwest and among blue-collar workers, was a defining feature of the politics of the early 21st century.
The sense that globalization enriched the affluent but left the less well-off destitute in the wake of the Great Recession was a driving force behind the populist nationalism whipped up by President Donald Trump in his 2016 election win.
Biden used his own history of support for working Americans and middle class values to pry swing states such as Wisconsin, Pennsylvania and Michigan from Trump’s electoral map on his way to the White House. But his presidency will rise or fall on his ability to narrow inequalities in a nation that spent the last Thanksgiving of the Trump era celebrating the Dow Jones Industrial Average hitting the historic 30,000 mark even as long lines of people stretched out at food banks in cities from New York to Dallas as they didn’t have enough to eat.
In the long term, Biden’s team, after two presidencies in which inequality has expanded despite massive economic expansion that has benefited the stocks-owning classes, must prove that vows to lift up the middle class are actually realistic in a globalized world and are more than just slogans flung out by nostalgic politicians on the campaign trail.
Forging social change
The credentials of many of Biden’s new team leave little doubt that the former vice president plans to keep his promises to America’s workers and to repay the faith of labor unions that have long backed his political campaigns.
Yellen started her professional life as a labor economist and has a reputation for seeking to shield the most vulnerable from the worst economic shocks. Cecilia Rouse, Biden’s pick to chair the Council of Economic Advisers, is also a labor economist and has said she turned to the discipline to forge social change.
In an article in the journal Democracy in June, Neera Tanden, who Biden has nominated as his budget director, wrote that the pandemic had exposed the “moral distortions” of the US economic system.
“To fix what is broken and rebuild stronger than before, we need a new social contract for the 21st Century, one that updates the New Deal,” Tanden wrote. “It is high time to rethink the relationship – the basic bargain – between the individual, companies, and our government.”
The most immediate test facing Biden’s team is an already dire economic situation that will likely be far worse when he takes office on January 20 as the pandemic rages in a fall and winter spike. Its resurgence, closing many restaurants and businesses that had struggled to revive over the summer, likely means the economy will struggle to grow and unemployment will rise during the first quarter.
Biden is in a similar position to newly elected Franklin Roosevelt when he waited months (the inauguration was in March in those days) in 1932-33 to tackle the Great Depression as his predecessor President Herbert Hoover – like Trump in the deepening Covid-crisis – was overwhelmed by the disaster unfolding on his watch. But unlike FDR, there is no expectation Biden will manage to pass nation-changing legislation to end the economic storm.
At best – if Democrats can somehow win two run-off elections in Georgia in January – Biden would have a 50-50 Senate with Vice President-elect Kamala Harris to throw tied votes his way. A Senate led by the Republican master of inertia, Sen. Mitch McConnell, is the more likely outcome, which would make a large stimulus package more difficult to achieve. There are already signs that the GOP is rediscovering its zeal for budget discipline, after four years of indulging Trump policies that exploded the deficit, which normally happens during downturns, at a time of economic growth.
Even a small short-term measure could help millions of Americans hurt by the ebbing of government support from previous stimulus packages that kept small businesses afloat, kept renters in their homes and provided extended unemployment benefits.
’Half a loaf’ is better than none
The Democratic House and the Republican Senate have for weeks been unable to agree on the size or make-up of a new Covid-19 relief support package. Trump’s absent leadership hasn’t helped.
The need is so acute that some Democrats have begun to tiptoe toward 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, a senior economic adviser in the Obama administration, told CNN’s Manu Raju on Sunday that “the virus really is the boss of the economy” and that there is a risk of a double dip recession.
“If they have to accept half a loaf, then they should accept half a loaf. And then let’s try to get another half of a loaf. But right now is really touch and go, and I wish both sides could see that,” he said.
McConnell said on Monday that it was still possible that an economic agreement could happen in the final days of the old Congress – though his remarks also could be interpreted as yet more posturing.
“Let’s hope our colleagues at the top of the Democratic Party can finally hear their own members and stop blocking the common sense, multi-hundred-billion-dollar measures that Republicans have been ready to deliver for months,” the Kentucky Republican said.
Biden has a history of sealing deals with McConnell and he will take office with the power that attaches to a newly inaugurated president.
He will be seeking not just short-term help for the unemployed and shuttered businesses but massive funding for states neglected by the Trump White House. He has ambitious plans for a new test-and-trace system to slow infections. States are asking for millions of dollars to stand up vaccination programs. And by the time that Biden takes the oath of office, many American kids will have been out of school for 10 months – with education officials still lacking federal help to make their eventual return to class safe.
Still, Biden will have the advantage of being able to argue to Congress that a new economic package – while desperately needed – will be a bridge to better times that are in the near future, thanks to the highly encouraging news about the effectiveness of vaccines developed under the Trump administration.
A more hopeful future
While there are long months of suffering, death and economic deprivation to come, the Democrat will at least take office in the expectation that normal life can resume in some form toward the middle of the year. If there is an explosion of pent-up economic demand, he could go into a midterm election year that is often punishing for first-term presidents able to argue he both beat the pandemic and saved the economy.
That’s when the second, more complicated part of the economic team’s job will begin: an attempt to reshape an economy that every President in modern memory has argued is biased against the less well-off but none has managed to rebalance. Given the extreme short-term and long-term impediments to his program and difficult political conditions, Biden probably couldn’t have chosen a better candidate than Yellen, who, if confirmed by the Senate, will be the first female treasury secretary.
The former Federal Reserve chair is respected on both sides of Capitol Hill, a quality that will be important in forging a new stimulus deal. Her knowledge of and good relations with the Fed will also be useful in maximizing the one-two punch the Treasury and central bank could use to kick start the economy.
Yellen’s nomination has also been welcomed by some progressives – an important consideration in keeping the fractious ideological groups in the Democratic Party together.