Can Team Biden Prevent a Recession?

Nancy Pelosi, President of the House of Representatives, Washington, D.C., December 21.

Photo:

Michael Reynolds/Shutterstock

The law Covid 19 adopted by Congress on Monday postpones – but does not solve – two problems that the new Congress and the Biden administration will encounter in early 2021: How much does the federal government have to spend to alleviate the suffering of Covid-19? And what needs to be done to prevent a double-dip recession and promote economic recovery?

The economy and society can only return to normal once the pandemic has subsided. This will take time, even though two new vaccines are being developed and licensed at record speed. America is unlikely to reach the required vaccination coverage before the summer at the earliest.

Meanwhile, states and communities are struggling with record numbers of infections and hospitalizations. Many are reintroducing the restrictions they lifted during the summer, leaving entire industries to deal with another blow. Restaurants close, the number of trips decreases, unemployment claims increase again. After stabilising in October, retail sales fell 1.1% last month. The employment growth rate has been declining for five consecutive months and may have come to a standstill in December. Many families are threatened with famine and eviction.

The new Assistive Technology Act addresses the most pressing concerns. Federal unemployment benefits were paid until the 14th. The month of March was extended, with a reduced but still considerable amount of $ 300 per week. In addition, persons with an annual income of less than $75,000 and couples with an annual income of less than $150,000 receive a cheque of $600 per person. Families with two children can receive up to $2,400.

Companies will be relieved, primarily through the $285 billion in comprehensive wage protection programs. The new restrictions ensure that payments go to small businesses as intended and that the benefits of the programme receive more favourable tax treatment. A new round of support is being offered to airlines in order to reduce the number of redundancies.

The bill provides for support measures, including USD 13 billion for the most affected families. In addition, the United States invests more than $1.5 billion in food aid and $25 billion in food aid. The moratorium on expulsions is extended, but only until 31 December. January.

Despite the efforts of governors, mayors and provincial councils, states and municipalities have not received the funding they need. Still, they didn’t leave empty-handed. Schools will receive additional support, as well as the public transport systems on which many core workers depend for their work. National and local health services get help with testing, contact tracing and distribution of vaccines. And the Affordable Care Act, passed in March, has been extended by one year until the end of 2021. States can hold tens of billions of dollars that would otherwise be lost on the 30th. December would be lost.

More policies and ideas

However, the eviction crisis will not end on 31 January and long-term unemployment will still be very high in March. There is no doubt that the Biden government wants to develop and eventually expand federal aid in these areas. Let’s see how the Republicans in the Senate react.

However, the country cannot afford another slow recovery from a deep recession. This is no ordinary crisis. The pandemic has accelerated structural changes for a long time. The online business flourished and the fixed-line business disappeared. Skilled workers have been protected from the worst consequences of the pandemic, while those without diplomas have had to fight. The economic gap between white Americans and other groups has widened. Minorities have also had a disproportionate number of hospitalizations and deaths as a result of Covid-19.

The Biden government is expected to respond with a programme to accelerate economic growth, create new opportunities for those affected by economic change and narrow the gaps created by the pandemic.

In a deeply torn congress, these measures would need two-fold support. This will not be easy because the political parties have different views on the appropriate role of the federal government in the economy. But most people have to agree that a high employment rate is good for everyone. If displaced workers are left behind, everyone is worse off. The same applies to women who withdraw from the labour market because their families cannot afford to care for children. Americans can also agree that the higher the percentage of employees who earn enough to support themselves and their families, the lower the burden of public and private philanthropy. In the same way, helping former detainees to return to work will give new impetus to families and communities, as well as to the local economy.

An economic programme based on common ground, across party and ideological lines, focuses on the needs of the American people. Equally important, it would help to overcome the divisions that have disrupted American policy.

Potomac Watch: In June, the Democrats called the coronavirus a great opportunity to restructure things our way. The Biden administration will continue this theme unless Republicans agree on budgetary discipline. Images : Zuma/AFP Composite : Mark Kelly

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Published in the printed edition of 23. December 2020.

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