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business Tuesday 19 January 2021
Biden’s test: Engineering economic boom in a partisan divide

By JOSH BOAK of the money is not yet
AP Economics Writer spent — would be a colos-
BALTIMORE (AP) — When sal waste and economi-
Joe Biden entered the cally harmful,” Republican
White House as vice presi- Sen. Pat Toomey of Penn-
dent, the economy was sylvania said in a state-
cratering. Job losses were ment.
mounting. Stocks were Republican voters have
crashing. Millions of Ameri- already turned bearish on
cans were in the early stag- the economy after Presi-
es of losing their homes to dent Donald Trump lost.
foreclosure as the housing The University of Michigan
bubble burst. reported Friday that its in-
Biden returns to the White dex of consumer expecta-
House as president a dozen tions among Republicans
years later with the econo- plunged from a reading of
my battered and shaken by 96 in October to 53 in Janu-
a pandemic. But this time ary. That could dampen
is different — and it could their willingness to spend
reset the nation’s politics if and encourage Republi-
Biden and Democrats can can lawmakers to blame
count on a level of growth Democrats for any eco-
not seen in a generation. nomic ills.
Despite the 9.8 million jobs The Washington Monument and the National Mall are visible as members of the U.S. Air Force Honor For now, the Biden team is
lost due to the coronavirus, Guard walk along the West Front of the U.S. Capitol at the site of the 59th Presidential Inauguration hoping to push through its
there are signs the coun- in Washington, Monday, Jan. 18, 2021. Associated Press stimulus with Republican
try is on the cusp of a kind support in the Senate. But
of boom unseen in the navirus front that could hurt haps stirring inflation. get Office at the time and the political tensions might
Obama and Trump eras. the economic recovery. But the Great Recession now serves as dean of Har- force him to pursue many
Checking account bal- The potential for a boom taught Biden’s team the vard University’s Kennedy of his initiatives — like a $15
ances have surged by $2.4 reflects in large part the benefit of going big with School. “Too many people minimum wage and tax
trillion since the outbreak roughly $4 trillion approved stimulus. Incoming White took the failure to hit (stron- increases on corporations
began. Home prices are so far in federal aid, with House Chief of Staff Ron ger growth) as a sign that and the wealthy — with
soaring because of hot de- Biden last week proposing Klain says Biden’s officials the stimulus didn’t work, only Democratic support.
mand. And each addition- $1.9 trillion more, an un- learned the hard way that when, in fact, the economy Should Republicans regain
al vaccination moves the precedented level of stim- the roughly $800 billion ap- was worse off than widely control in Congress, any
world’s largest economy ulus. proved in 2009 to fight the understood.” policies passed exclusively
closer to fully re-opening. The additional money, Great Recession was insuffi- Biden can count on back- with Democratic backing
“If the economy is improv- which must be approved cient, a mistake they’re un- ing from Wall Street inves- could be quickly reversed
ing substantially by spring by Congress, is intended willing to repeat this time. tors this time to borrow. or allowed to expire. This
or early summer, that might to accelerate the vaccine “It wasn’t large enough,” Helped by supportive seesawing between con-
actually help Biden get rollout, reopen schools and Klain said Friday at a Federal Reserve policies, flicting policies could erode
more of his agenda done reduce the child poverty livestreamed Washington low interest rates make it the degree of certainty that
... because success can rate to a historic low. Post event. “Our recovery easier to keep financing businesses and consumers
beget success,” said Ja- The investment bank Gold- lagged as a result.” a stimulus and repay add- need to make investments
son Furman, who was top man Sachs estimates that During the first nine months ed debt. The interest rate that lead to growth, said
economist for the Obama growth this year could be of the Obama presidency, on a 10-year U.S. Treasury Donald Schneider, a mem-
administration. He pointed 6.6% if part of Biden’s stimu- the unemployment rate note is about 1.15%, com- ber of the policy research
to the possibility of growth lus plan passes. That would climbed to 10% and the pared with 11.67% in 1984 team at Cornerstone Mac-
easing the path for an in- be the strongest gain since swift recovery that was pre- when growth prospects last ro and former chief econo-
frastructure program and 1984, when a 7.2% increase dicted never happened looked this good and the mist of the House Ways and
climate investments. in the gross domestic prod- as the country took years size of the federal debt was Means Committee.
But hanging over any ef- uct helped carry Republi- to work through housing significantly smaller. “It is a big problem going
fort to boost the economy can President Ronald Rea- foreclosures and rebuild its Republican lawmakers still forward if one side comes
is an enduring partisan di- gan to a second term in a financial system. see the need for more aid to power and makes
vide that contributed to landslide. Wells Fargo fore- This left Obama adminis- to contain the pandemic, changes and then the oth-
the deadly assault on the casts growth of 4.6% this tration officials having to but some are voicing con- er side comes into power
U.S. Capitol this month as year, which would be the argue that the economy cerns about Biden’s desire and reverses them and on
Biden’s Electoral College best since 1999. would have been even for another big spending and on it goes,” Schneider
victory was set to be certi- Still, there are plenty of eco- worse without the stimulus. package. They stress that said.q
fied. Politics is increasingly nomic risks facing Biden. Republicans countered any new spending should
shaping how Americans The most bullish forecasts that the effort had flopped be directed toward in-
feel about the economy, hinge on getting much as they won control of the creasing vaccinations and
scrambling the political in- of Biden’s aid package House in the 2010 midterm that his proposal for direct
centives for lawmakers to through Congress. And any elections. checks of $1,400 per per-
cooperate. gains would probably de- “There isn’t much doubt son could delay people
There also are concerns pend on overcoming the that the economy did from returning to work.
about whether the wors- pandemic. There is also the better in 2009 and 2010 “Blasting out another $2 tril-
ening pandemic and slow possibility that the added because of the recovery lion in borrowed or printed
pace of vaccinations thus stimulus championed by act,” said Douglas Elmen- money — when the ink on
far could portend more se- Biden could be more than dorf, who was director of December’s $1 trillion aid
rious problems on the coro- the economy needs, per- the Congressional Bud- bill is barely dry and much facebook.com/arubatoday/