The person taking the oath of office on Jan 20 will encounter economic disarray and this will be true whether it’s Joe Biden or Donald Trump, and true whether or not the off and on negotiations over a new round of pandemic relief yield anything.
Given mass failures of small businesses and continuing astronomical numbers of people filing for jobless benefits, the President will encounter a situation uncannily comparable to the situation Joe Biden and President Obama encountered a dozen years before.
If it is Joe Biden who comes to power, along with Democratic majorities in the House and Senate, he will have something rare, the opportunity to look at the lessons of recent yore and have a do-over.
Barack Obama’s first legislative focus, the $787 billion American Recovery and Reinvestment Act of 2009, demonstrates what can go awry when the Government spends money on a mass scale to resolve an economic situation.
Mainstream economists believe that the legislation helped stabilise financial markets and start an economic expansion that would last a decade, but it also proved underpowered and politically toxic, with lasting consequences for Barack Obama’s presidency.
It offered fuel for the president’s adversaries to depict him as an extravagant debt spendthrift. Yet it was also insufficient to forge a robust recovery and the unemployment rate the month of the 2010 midterm elections was 9.8 per cent, almost as high as it had been a year earlier.
That combination of a fragile recovery with the perception of profligate spending helped Republicans retake the House of Representatives.
Most voters never agreed with the opinion of economists that the recession would have been more alarming if not for the stimulus bill.
In 2010, for instance, only 35 per cent of Americans in a Pew survey thought that the legislation had helped keep unemployment from getting worse and by distinction, 80 per cent of economists surveyed in 2012 said the legislation had resulted in a lower jobless rate that year.
The lesson, if you’re going to shoot your shot at improving the economy, you’d best go big enough to not just stop it from crumpling, but also to get a boom underway.
The same economic challenges will apply if Donald Trump is re-elected, though the likely policy path would be different.
In negotiations over pandemic relief spending, the administration has embraced help for businesses, including protecting them from virus related legal liability and many Republican senators have fought a new large scale stimulus, despite occasional tweets from the President endorsing it and his allies have argued that the administration’s strategy of deregulation and low taxes will create a robust recovery as public health concerns ebb.
Joe Biden is just a human being like all of us and it’s not fair to expect any more than the best that he can do.
He’s going to have to do a lot just to fix the damage that Donald Trump has done, plus there are tons of laws that need to be strengthened or replaced and the people of America can’t now count on some sort of old boy sense of propriety as a normal.
They have to ground their Government on something more solid now, so someone like Donald Trump can never happen again, at least for the sake of coming generations. So, just remember Donald Trump’s herd mentality, because the more he talks the more people start to believe it.
