“Inheriting” the worst economy in modern American history, can Biden’s “combination punch” succeed in breaking the situation?

According to comprehensive US media reports, when Biden takes over on January 20th, he will take over the double crisis of economy and public health-the new crown epidemic in the United States is raging, causing tens of millions of Americans to lose their jobs and increasing poverty. The family is in crisis, and the resources of state and local governments are on the verge of collapse-this is a serious challenge that the United States has not encountered in generations.

▲The US media said that Biden will face severe challenges that the United States has not encountered in generations. According to AFP

Prior to this, Biden served as the vice president and, together with Obama, took over the US economic mess after the financial crisis. And this time, in the face of the economic difficulties tied up by the public health crisis and the structural problems of the US economy, what is Biden’s response and can it be achieved?

5 statistics to understand the US “economic difficulties”

According to a report in Forbes magazine, the United States’ “economic distress” is not alarmist, as can be explained by five latest data, and they also point to the problems that the Biden administration needs to solve urgently within the first 100 days of the term of office.

1.1 million unemployed population. Under the epidemic, the number of initial claims for unemployment benefits in the United States exceeded a record high. As many as 22 million people were unemployed. So far, less than half of them have regained employment opportunities. In December 2020, the U.S. unemployment rate was 6.7%, which was more than half lower than the 14.7% in April, but still much higher than the 3.5% before the epidemic began.

▲People waiting to apply for unemployment benefits outside the State Office of the Department of Labor in Las Vegas, USA, March 18, 2020. According to “New York Post”

  1. 14 million people are in arrears with rent. According to the analysis of the US Think Tank Budget and Policy Priority Center, as many as 14 million Americans defaulted on rent in December 2020, that is, nearly 20% of adult Americans cannot pay rent. Among the colored ethnic groups, this proportion is even higher. For example, the proportion of rent arrears of African Americans reached 28%.

3.18% of families do not have enough food. Data from the U.S. Census Bureau and an analysis by the Center for Budget and Policy Priorities in the United States show that within a week of December 2020, 18% of American families with children reported insufficient food. At the same time, among families without children, the proportion of reported undernourishment reached 11%.

  1. The average annual GDP growth rate is 0.9%. According to data from Moody’s Analytics, a global financial intelligence provider, the true average annual growth rate of US GDP during the Trump administration was 0.9%. The average annual growth rate of the US economy during the Obama administration was 1.6%, while the growth rate during the Clinton administration was 3.9%.
  2. Retail sales fell another 0.7%. According to data released by the US Department of Commerce, despite the holiday shopping season, US retail sales fell 0.7% month-on-month in December 2020, which was lower than expected -0.1%. This is already the third consecutive month of decline in US retail sales. The analysis pointed out that this also shows that the degree of economic recovery in the US is worrying.

▲Some analysts pointed out that some businesses and jobs in the United States may disappear forever under the epidemic. According to “U.S. News and World Report”

Can the “American Rescue Plan” advance as scheduled?

According to U.S. media reports, when successive U.S. presidents came to power, they promised to quickly implement their plans and fulfill their promises. On the evening of January 14, local time, when announcing the US$1.9 trillion “U.S. rescue plan”, Biden repeatedly emphasized that “it must act’now’.”

According to CNN analysis, there is no doubt that the current plan is still just a plan, and it will be challenged and it will take time to make it a reality. In view of the fact that Senate Majority Leader McConnell has repeatedly expressed his opposition to it, Biden will need to integrate more people in Congress in the future to obtain the votes needed to advance various bills. In the meantime, it is inevitable that compromises and concessions will be required.

CNN pointed out in the report that, unlike the subprime financial crisis faced by the Obama administration when it came to power, the economic difficulties that the Biden administration needed to deal with were caused by the epidemic. For this reason, the degree of economic recovery depends more on the degree of prevention and control of the epidemic, rather than the economic stimulus bill-only when the epidemic is effectively controlled and people’s lives return to normal, business and consumption can truly recover.

▲On November 24, 2020, Biden made an appearance with some nominees for cabinet members. According to “Los Angeles Times”

Many health experts pointed out that the situation in the United States may continue to deteriorate, and deaths from new coronary pneumonia are likely to usher in a peak in late winter and early spring. At present, the number of new cases, hospital admissions, and deaths in a single day in the United States are at or near historical peaks. And this means further blockade, and leads to further commercial stagnation-not to mention that there are new strains of the new coronavirus that are more contagious in the United States. On the other hand, the key to solving the epidemic, that is, the status of vaccine vaccination has never been satisfactory. The public’s resistance to vaccines and non-cooperation with epidemic prevention and control measures will cause the Biden government to promote vaccination and achieve herd immunity goals, which will cause huge obstacles.

“When the pandemic is still raging, you can do very little from the perspective of economic policy alone.” American economist Andrew Hunter pointed out.

Another problem that cannot be ignored is that even if the epidemic is over, some companies that have not survived the “winter” have disappeared, and many jobs have permanently disappeared. According to Moody’s analysis and prediction, even if the economic policies of the Biden administration can be implemented smoothly, the US job market will not return to its pre-epidemic level until at least 2022.

Biden launches a policy portfolio targeting economic structure

In addition to launching large-scale economic stimulus and assistance in response to the current economic difficulties, the Biden administration has also put forward a series of policy propositions in response to the structural problems of the US economy.

According to the Global Times, in terms of taxation policy, the Biden administration and the Trump administration are the exact opposite, increasing the corporate tax from 21% to 28%; increasing the maximum personal tax rate from 37% to 39.6%, with a view to reaching ten This year, an increase of 3.3 trillion US dollars in fiscal revenue is contrary to Trump’s 1.5 trillion dollar reduction in fiscal revenue.

▲Tax cuts are a landmark achievement of the Trump administration, although relevant polls show that more than 70% of the American people support tax increases for the rich with annual household incomes of more than $250,000. According to BBC

In addition, in terms of fiscal expenditure, the Biden government plans to invest US$200 billion and US$300 billion in clean energy and infrastructure respectively; invest US$1.7 trillion in clean energy in the next ten years and leverage US$5 trillion in local and private investment. , To create 10 million jobs; in terms of trade, it opposes unilateral tariffs and raises the tax rate on US companies’ overseas income from 10.5% to 21% to stimulate overseas investment and manufacturing to return, while implementing the “buy American” policy.

However, if this policy combination is to be truly realized, there will be many difficulties. “Biden will only be able to achieve some of these claims, because he can’t achieve things that are beyond the wishes of most moderate Democratic senators,” Harvard Kennedy School of Political Science and Chief Economist Jason J. Foreman told BBC News, “Easier said than done. The Democrats only have a slight majority in the Senate and cannot realize all their claims.”

Some analysts pointed out that Trump has repeatedly mentioned the infrastructure construction plan before, but it has become a “Washington joke” because of repeated failures. Many of Biden’s environmentally friendly policies are still controversial issues. The cost and price drew criticism from Republicans.

Red Star News Reporter Lin Rong

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