How Biden’s First 100 Days Could Impact the Economy
President Joe Biden’s inauguration as the 46th president of the United States on Jan. 20 set a new tone for the country. One of the key things Americans are looking for is a turnaround in the economy after almost a year in a pandemic.
The new president has promoted what he calls his American Rescue Plan. The top priority is distribution of the coronavirus vaccines, with a target of 100 million vaccines administered in the first 100 days. Although this is an acceleration of the current vaccine program, it would leave most Americans unvaccinated by early May. President Biden will also call for a mask mandate and emergency paid sick leave, both of which would help slow the spread of the virus until everyone has access to a vaccine. Still, without a widespread vaccine, commerce will remain slow.
In addition to the vaccine program, the incoming administration has asked for funding to ensure that K-12 schools can reopen in the first 100 days. This would require spending on testing, personal protective equipment and ventilation. If schools reopen, then parents and guardians will be better able to work.
Much of this depends on President Biden’s ability to get his stimulus bill through Congress, especially given that the Senate may be distracted by the impeachment trial of former President Donald Trump. Biden’s stimulus bill includes funding for paid sick leave and school reopening as well as a payment of $1,400 per person; an increase in the minimum wage to $15 per hour; extended unemployment insurance; housing assistance including rent, mortgages and utilities; expansion of SNAP and other nutrition programs; funding for state, local and tribal governments; and grants and loans for small businesses. This will likely look significantly different by the time Congress is done with it.
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President Biden will be able to make some changes through his executive power without the need for legislation. The below list includes some changes Biden has already made with his executive orders, but some of the other issues listed are goals of his:
- Assemble a coronavirus task force to help get the economy reopened faster.
- Rejoin the World Health Organization and the Paris Agreement on climate change.
- Increase the corporate tax rate to 28% from 21%.
- Make the DACA (Deferred Action for Childhood Arrivals) program permanent.
- Stop family separation at the border.
- End the travel ban on arrivals from certain majority-Muslim countries.
Only a few of these have a direct effect on the economy. The increase in the corporate tax rate is likely to be perceived negatively, but the largest companies have found ways around paying taxes and smaller ones probably didn’t have much taxable income in 2020, given the state of the economy. Although spending to mitigate climate change could be an economic drag, it could also stimulate the development of new technologies. Furthermore, many businesses have taken environmentally responsible steps independent of federal policy either because their shareholders and customers have asked for it or because they were pretty sure the U.S. would eventually rejoin the Paris Agreement.
The key issue is getting the legislation through Congress. The House of Representatives has a Democratic majority. The Senate is split evenly, Democratic and Republican. Should there be a tie, then Vice President Kamala Harris gets to break the tie. This makes it likely that most of Biden’s requests will pass, but it is hardly a certainty.
The most pressing issue is getting the coronavirus under control. Restaurants and movie theaters can be allowed to reopen, but that doesn’t mean that people will go out.
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President Biden has one key economic advantage that President Donald Trump did not have: When the economy reopens, the amount of pent-up demand and easy comparisons will lead to higher GDP growth, higher employment and better corporate results. The flu pandemic of 1918-1919 was followed by the Roaring ’20s. We will be able to celebrate its centennial in style, especially because this time, the bars will be open.
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