Biden again faces challenge in repairing mangled US economy
BALTIMORE — Joe Biden will inherit a mangled U.S. economy — one that never fully healed from the coronavirus pandemic and could suffer again as new infections are climbing.
The once robust recovery has shown signs of gasping after federal aid lapsed. Ten million remain jobless and more layoffs are becoming permanent. The Federal Reserve says factory output dropped.
Parents cannot return to work as child care centers have shuttered. Restaurants and local retailers are draining whatever cash reserves are left with many owners wondering if the next week might be their last.
The presumptive presidentwill also be facing an American public with decidedly different views about their own financial well-being, with higher income families weathering the pandemic reasonably well and those earning far less in increasing economic peril.
It will in someways be a reprise of when Biden became vice president at the depths of the financial crisis in 2008-09, with possibly fewer tools and less political leverage to press an agenda to both corral the virus and stoke economic growth.
He is expected to somehow inject enough aid to sustain workers, businesses and state and local governments, without necessarily having enough congressional partners who share his concerns.
All of this could be the difference between a successful presidency and a floundering one.
It’s unclear whether his apparent victory was enough to tip the Senate to the Democrats — with two Senate seat runoffs in January in Georgia — and
provide a clearer pathway for the money. This means that any efforts to secure another round of aid may depend on Republicans who were already voicing concerns about a rising budget deficit before the election.
Senate Majority Leader McConnell of Kentucky previously said a measure should be passed before year-end, but it’s unknown in the aftermath of the election what a compromise would look like or whether President Donald Trump would back it. The longer that aid gets delayed, the greater the threat for the economy.
“The risk is that the recovery goes into reverse,” said Gregory Daco, an economist for the consultancy Oxford Economics.
AP VoteCast, a survey of more than 110,000 voters, found that the recession’s harm has mostly struck lower-income households, though most people were shielded in large part by initial rounds of aid that nearly totaled $3 trillion.
Twenty-nine percent of voters in households earning less than $50,000 annually said they’re falling behind financially. Their misfortune is a sharp contrast to what’s happening for those with incomes above $100,000. Not only
are higher-earners less likely to be struggling, but 26% said their finances are improving.
Biden received more support than Trump from households earning less than $50,000. Voters in higher income households were more closely split between the two candidates.
Among Biden voters, 89% said it was more important to contain the pandemic than limit any ongoing damage to the economy. This is likely because they see no trade-off: the economy will never safely recover so long as the threat of the coronavirus exists.
“To get the economy under control, you need to get the virus under control,” said Amanda Fischer, policy director at the Washington Center for Equitable Growth, a liberal think tank. “It’s the Kshaped recovery—we see a divide between thewealthiest and everyone else.”
The economy was objectively hurting as ballots were cast, even if it has improved since April. The unemployment rate was 6.9%, compared to 4.7% when Trump took office. Retail sales slipped 0.8% since the start of 2020, with a collapse at restaurants, clothiers and furniture stores.