Home Finance The US Charts a New Course Towards Recovery Under President Joe Biden

The US Charts a New Course Towards Recovery Under President Joe Biden

by internationalbanker

By John Manning, International Banker

And so, after perhaps the most turbulent election and transition period in American history, Joseph R. Biden Jr. was finally confirmed as the new president of the United States. Despite numerous unfounded allegations of electoral fraud, dozens of rejected lawsuits and an unprecedented assault on the nation’s Capitol building among several notably disruptive events that took place in the 2 or so months following election night on November 3rd, Congress finally affirmed Biden’s Electoral College victory on the morning of January 7th, with the former vice president having soundly beaten Donald Trump by 306 electoral votes to 232.

More than anything, it would seem that Biden’s victory represents a culmination of the endurance of the American public of four years of the most unpredictable, the most controversial, and in the opinion of more than a few neutral observers, the most downright disastrous presidency ever recorded. By calling time on Trump’s term in office, voters have clearly signalled their desire for a change in direction for the country. “I could not vote for Donald J. Trump. His consistent lies, his handling of COVID, failure to follow science, whether it’s with Anthony Fauci or climate science, I just cannot tolerate,” Roy Smetana, Ohio lifelong Republican and retired Army Reserve officer told investigative news programme 60 Minutes, just prior to the election. Given Biden’s resounding victory, it would seem that there were a significant number of voters – Republican or otherwise – who found themselves in the same boat as Mr. Smetana.

But for the red half of the country in particular, conservative voters found themselves increasingly at odds with Trump’s GOP, a party that became almost entirely unrecognisable from that of previous incarnations under such celebrated figures as Lincoln, Eisenhower and Reagan. And whilst they may have been willing to take a gamble on a maverick outsider in 2016, November’s result, which saw over 7 million more people vote for his opponent, made it clear that Trump was simply not fit for another term in office. As for Trump himself, his reign at the top could not have come to an end in a more ignominious manner. With thousands of his supporters storming Congress at the United States Capitol to invoke insurrection against the government, Trump ended his only term as president having been impeached for a second time – the only president to hold such an undesirable record, and losing the popular vote in both the 2016 and 2020 elections. And to compound matter, he now faces the possibility of exemption from running for political office again, as well as potentially facing criminal charges of inciting an insurrection. 

As far as Biden is concerned, however, it would seem that Americans are willing to trust his ostensibly more conventional style of governance, as well as his ability to heal a polarised nation which he repeatedly promised on the campaign trail. This is especially understandable given how poorly the previous government handled the coronavirus crisis. With over 430,000 Americans now dead from COVID-19, representing around one-fifth of the global death toll, and with the US experiencing an economic shock of unprecedented proportions as a result of the pandemic – annual GDP contracted by -9%, -2.8% and -2.5% in last year’s second, third and fourth quarters respectively, citizens in their droves have voted for the candidate who repeatedly promised that he will “follow the science,” and against the candidate whose administration remained distinctly anti-science until the bitter end, and who stood in almost complete defiance of the experts, no matter how slightly at odds their advice was to his almost-deliriously optimistic political message.

Oddly similar to the torrid economic conditions facing the incoming Obama administration back in 2009, under which Biden served as vice president, the new Democratic-controlled regime once again takes over in the midst of a devastating recession that requires immediate attention. From that perspective, Biden’s election victory is as much an endorsement of his credentials as one of the key architects of the economic rescue from the 2008 global financial crisis as anything else. Given his successful association with such a dramatic economic turnaround, therefore, it is no surprise that Americans are again putting their faith in Biden’s ability to pull the country back from the brink.

Biden himself seems to have wasted no time in getting down to tackling the COVID crisis, which he considers his biggest immediate priority. On January 21st, he issued the National Strategy for the COVID-19 Response and Pandemic Preparedness which outlines in detail the government’s national strategy to beat the COVID-19 pandemic. “It is a comprehensive plan that starts with restoring public trust and mounting an aggressive, safe, and effective vaccination campaign,” the president explains in the 200-page document. “It continues with the steps we know that stop the spread liked expanded masking, testing, and social distancing. It’s a plan where the federal government works with states, cities, Tribal communities, and private industry to increase supply and administer testing and the vaccines that will help reopen schools and businesses safely.” To that effect, the strategy has seven clear goals:

  1. Restoring trust with the American people – signalling clear public leadership and a commitment to a robust whole-of-government response that puts science first
  2. Mounting a safe, effective, comprehensive vaccination campaign – Biden has pledged that his administration will oversee the injection of 100 million Covid-19 vaccine shots during his first 100 days in office, and creating as many venues as needed to administer the vaccine
  3. Mitigating spread through expanding masking, testing, treatment, data, workforce, and clear public health standards – the federal government will partner with state, local, Tribal, and territorial leaders to implement a cohesive strategy to significantly reduce the spread of COVID-19 and release clear public health guidance to the public about what to do and when
  4. Immediately expanding emergency relief and exercising the Defense Production Act – expanding emergency relief to state and local governments and addressing urgent supply gaps, which will require monitoring and strengthening supply chains, while also steering the distribution of supplies to areas with the greatest need
  5. Safely reopening schools, businesses, and travel, while protecting workers – providing guidance for these processes as and where necessary
  6. Protecting those most at risk and advancing equity, including across racial, ethnic and rural/urban lines – the federal government will address disparities in rates of infection, illness and death
  7. Restoring US leadership globally and building better preparedness for future threats – restoring the US’ role in leading the world through global crises, advancing global health security and the Global Health Security Agenda, including by supporting the international pandemic response effort, providing humanitarian relief and global health assistance, and building resilience for future epidemics and pandemics.

Biden has also begun restoring ties with the World Health Organization (WHO) that had been previously cut by the Trump administration, which provides a strong indication of the more open, collaborative approach towards leadership that the new administration will take when it comes to solving global challenges. And with Dr. Anthony Fauci, the nation’s top infectious disease expert, back at the helm of the COVID response as Biden’s chief medical adviser, having previously fallen out of favour with the Trump administration, it only further underlines how seriously the president is pushing to combat the virus. Indeed, Fauci was the US’ top representative at the WHO’s executive meeting on January 21st. “As a WHO member state, the United States will work constructively with partners to strengthen and, importantly, reform the WHO, to help lead the collective effort to strengthen the international COVID-19 response and address its secondary impacts on people, communities, and health systems around the world,” Fauci said during the meeting.

From an economic standpoint, meanwhile, Biden’s $1.9 trillion COVID economic relief plan is now on the table. The American Rescue Plan mostly represents an expansion of the relief packages approved by Congress in March 2020 ($3 trillion) and December 2020 ($900 billion). There are a few notable inclusions:

  • providing an additional $1,400 per eligible recipient to the $600 payments that were approved by Congress in December
  • boosting unemployment benefits from $300 per week to $400
  • injecting $25 billion into rental assistance for low-income and moderate-income households who lost their jobs during the pandemic, which adds to the original $25 billion approved in December
  • creating a $25 billion emergency fund for child care provision plus adding $15 billion to an existing child care grant program
  • $15 billion in grants for small businesses
  • investing $20 billion in a national vaccination program

The package is yet to be approved, however, and is likely to face stiff opposition from Republicans in Congress. Indeed, with such a razor-thin majority in the House of Representatives and an almost even split in the Senate, the final composition of the relief package could well end up being markedly different to what Biden has proposed.

Aside from the coronavirus, tackling the climate crisis appears to be Biden’s next top priority, with plenty of evidence already being shown of his commitment towards a greener, more sustainable economy. Indeed, within the first few hours of his presidency, Biden had signed an executive order to re-enter the Paris Climate Accord after the US was officially taken out of the agreement by the Trump administration last November. The re-joining process, however, is unlikely to be too complicated – Biden sent a letter to the secretary-general of the United Nations outlining the US’ recommitment to the agreement on January 20th, which should facilitate completion of the process in 30 days’ time.  

Highlighting the renewed emphasis on climate, moreover, Biden has made some key appointments in this area including Obama-era secretary of state John Kerry who will serve as his special presidential envoy for climate. “This marks the first time that the NSC (the White House National Security Council) will include an official dedicated to climate change, reflecting the president-elect’s commitment to addressing climate change as an urgent national security issue,” the Biden transition team stated. The former head of the Environmental Protection Agency, Gina McCarthy, also comes on board as the White House national climate advisor.

The concerted shift away from fossil fuels has also commenced with Biden already having issued a handful of key environmental directives. For one, Biden has moved to cancel the permit for the $9 billion Keystone XL pipeline, a project which Trump had promised would be built. “The Keystone XL pipeline disserves the U.S. national interest.  The United States and the world face a climate crisis.  That crisis must be met with action on a scale and at a speed commensurate with the need to avoid setting the world on a dangerous, potentially catastrophic, climate trajectory,” states Biden’s Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis. “Leaving the Keystone XL pipeline permit in place would not be consistent with my Administration’s economic and climate imperatives.” The president has also placed a “temporary moratorium” on all oil and gas leasing activities in the Arctic National Wildlife Refuge, due to “alleged legal deficiencies underlying the program” and the lack of a much-needed environmental review.

From a geopolitics perspective, Biden will almost certainly want to reinstall perhaps the most important global multilateral agreement of all: the 2015 Joint Comprehensive Plan of Action (JCPOA, or more commonly known as “the Iran nuclear deal”), which was initially agreed under Barack Obama. Biden has indicated that he will agree to the deal once more should Iran return to the original terms of compliance set out in the deal, as well as build on it to foment a more lasting peace with the currently isolated state. This would certainly please the JCPOA’s European signatories such as Germany, France and the UK who have been working to save the deal in the face of the US withdrawal in 2018 and the addition of new sanctions by the Trump administration. Indeed, Biden has already spoken with French President Emmanuel Macron on the issue, with both leaders reportedly agreeing to coordinate on a range of Middle East issues. According to the French side, the two leaders discussed “their willingness to act together for peace in the Near and Middle East, in particular on the Iranian nuclear issue.”

As such, the international community can once again look forward to joint cooperation with a Biden-led US when it comes to solving a number of international challenges. Indeed, Biden’s broad support for multilateralism stands in distinctly stark contrast to Trump’s isolationism, a policy that saw him not only leave the Paris Climate Agreement and the WHO (in the middle of a pandemic, no less), but also the Trans-Pacific Partnership, the UN’s culture and education body UNESCO, and the UN Human Rights Council, to name a few. It can be reasonably assumed that Biden will seek to re-join some if not all of the aforementioned agreements as soon as possible.

One might also expect the US to initiate warmer international trade relations, especially with China which should be a relief for those countries that are dependent on healthy trade with one or both nations. “We assume a Biden win that reduces some trading uncertainty,” according a report by Swiss bank Lombard Odier noted just prior to the November election. “Biden’s presidency could lead to a more rational approach to bilateral trade — even if his team could prove as hawkish on China as Trump’s on other matters.” But will it lead to complete halt on the trade war initiated by the Trump administration? While he has acknowledged that that tariffs have damaged American businesses and consumer confidence, he has nonetheless called for the US to “get tough on China.”

If he takes action, however, it may not happen immediately. Biden has stressed that he won’t be entering into any new trade agreements “until we’ve made major investments here at home, in our workers and our communities.” Plus, a Biden administration is likely to move much more strongly in the direction of multilateralism than his predecessor. And it would be through this collaborative approach, rather than through unilateral protectionist measures, that he will hope to put pressure on China, particularly with regards to challenging its questionable trading practices.

That moratorium on trade agreements may also extend to the UK, which is seeking a deal with the US having finally exited from the EU’s Single Market and Customs Union at the end of 2020. It now stands ready to implement its own independent trade policy with various jurisdictions, and a robust agreement with the US will certainly be high on the priority list seeing as it represents the UK’s single largest trading partner country with trade between the two in 2019 worth $302 billion. But while the official UK statement of the recent call between Prime Minister Boris Johnson and Biden mentioned that “the benefits of a potential free-trade deal between our two countries” was discussed, the equivalent statement from the White House did not mention any discussion on trade.

More generally, Biden’s victory – and Trump’s defeat – will surely resonate around the world as yet another firm repudiation of right-wing populism. With significant defeats being notched up for the Austrian Freedom Party, the Alternative für Deutschland, Matteo Salvini in Italy, Greece’s Golden Dawn at a more extreme level, and now Trump, there is likely to be a growing belief that populism’s death march is well and truly in motion, and that centre-left politics can once again play a hugely influential role on the international stage. Indeed, Biden’s election comes hot on the heels of thumping victories by Jacinda Arden’s Labour Party in New Zealand and Luis Arce of the Movement for Socialism Party in Bolivia. Perhaps this should not be surprising – given that the world is still in the midst of a global pandemic, the need for more social services such as healthcare and unemployment benefits is now greater than ever.

Just how far leftwards Biden will stretch remains to be seen, however. With a well-publicised ideological schism emerging in recent years within the Democratic Party between moderate, centrist Democrats and the more socialist-leaning, “Bernie Sanders wing” of the party, there will be more pressure on Biden than ever to implement decidedly more progressive policies than in previously Democratic-controlled governments. To his credit, Biden has made clear his support for such policies including a national minimum wage of $15 per hour, bold moves towards mitigating climate change and the cancellation of some forms of student debt.

But with such slim majorities in Congress, it won’t be easy for the Democratic Party to push through Biden’s legislative agenda. With Sanders as the new chair of the hugely influential Senate Budget Committee, however, he can implement a process known as “budget reconciliation” to advance the approval of bills that may have otherwise been met with resistance in Congress. Other notable appointments made by Biden include progressive representative Deb Haaland who is slated to be the new secretary of Interior, and who is also the first Native American to ever lead the federal agency which will have direct oversight of tribal interests; as well as Rep. Marcia Fudge, Biden’s progressive nominee for secretary of Housing and Urban Development. Fudge intends to push for greater rental assistance and access to affordable housing during the pandemic, among other goals.

That said, not all Biden appointees are being roundly welcomed. Tom Vilsack, Biden’s nominee to lead the US Department of Agriculture, for instance, whose questionable record in the department has led to significant opposition to his appointment from a number of organisations, including environmental bodies, African American farmers and progressive organisations. “Vilsack has made a career of catering to the whims of corporate agriculture giants – some of whom he has gone to work for – while failing to fight for struggling family farmers at every turn,” stated Roots Action and Food & Water Watch (FWW), a non-profit organisation focused on government accountability on environmental issues.  

But with COVID-19 continuing to control the narrative for the time being, much of Biden’s time and energy will be focused on alleviating this long-running problem before he can move on towards fulfilling other pledges – much in the same way as he was predominantly occupied with the financial crisis when he became vice president in January 2009. Nevertheless, with Trump having all but lost control of the pandemic, and after all the madness of the last four years, millions of Americans will now feel that with Biden at the helm, the country can chart a decisive course towards normalcy once again.


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