President-elect: Inheriting an economy in disrepair

The Week Staff
·3 min read

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"Voters didn't elect Joe Biden because they thought he would be the best steward of the economy," said The Economist, but the economy may well define his presidency anyway. Biden's first test will be "persuading Congress to keep the purse strings loose" and stave off further economic calamity. "If the virus again puts the economy to the sword," he may have to save it with much less support from Republicans. But the new president also must consider "the post-vaccine economy." Lockdowns and work-from-home have ushered in a new world in which "intangible capital replaces brick-and-mortar" far faster than anticipated. So far, Biden has shown a "nostalgia for manufacturing jobs and an impulse to load firms with worthy social goals." But as the turn to technology reshapes the labor market and tears at the social fabric, Biden will need an administration that will not stand in the way but seek to "help people adapt."

Another key question revolves around how Biden handles trade, said Edward Alden at Foreign Policy. Don't expect the U.S. to quickly return to an era of multinational trade agreements. Instead of saying he would "work with allies on a common trade policy," Biden has "matched Trump sound bite for sound bite" on China. His "Build Back Better" campaign platform was erected around similar protectionist promises, too; he's even pledged that the government won't be "purchasing anything that is not made in America." But after four years of President Trump, "the international trade system is collapsing." Without America's leadership, 14 Asia Pacific nations — including Japan, South Korea, and Australia — just joined with China in their own free-trade bloc, effectively replacing the Trans-­Pacific Partnership, which Trump pulled out of in 2017. The rest of the world won't "stand still while the U.S. gets its house in order."

More than trade, business owners' biggest concern is the prospect of new shutdowns, said Gene Marks at Washington Times. Small-business owners, in particular, "don't do Zoom." They have to leave their houses and "soldier on and live with the virus" to provide for their families. However, some businesspeople think the election yielded a "dream scenario," said Greg Ip at The Wall Street Journal. Biden is a predictable, steadying force that won't be issuing "sharp criticism of companies, by name, on Twitter." But, if it holds, a Republican-led Senate means his "more aggressive plans can't pass the Senate," hamstringing legislation intended to increase taxes, confront climate change, empower unions, or add a public health option.

Divided government also means "paralysis in a time of crisis," said Paul Krugman at The New York Times, and that's bad for everyone. With a Republican-led Senate, "the best we can hope for" is a stingy stimulus package and no money to "repair our crumbling infrastructure, care for our children, and meet the urgent need for action against climate change." Still, the economy should be "easier to clean up" than in 2009, said John Harwood at CNN. The snapback of output and hiring in the summer offers "the promise of substantial improvement" if vaccines arrive in 2021. "And simply replacing an erratic, fumbling administration with an experienced, serious-minded one" will help.

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