Bidenomics: What Middle-Class Joe Means for Business and the Economy


President-elect Joe Biden will take office in January facing a pandemic, a vulnerable economy, a divided Congress, and a solid portion of the electorate that’s been convinced by PresidentTrump that the election was stolen.

What will he do—better yet, what can he do? He can’t claim a mandate for the Democrats’ progressive campaign platform: The race was close and was mainly a referendum on Trump’s personality, not the Democrats’ agenda. By nature Biden is a healer and a bridge-builder, not a change agent. And if he does push to enact his party’s most ambitious ideas, Mitch McConnell of Kentucky, the likely Senate majority leader, willstand in the way.


The new configuration in Washington could be good for corporate profits, but not necessarily for the economy.Stocks shot up Nov. 4 and 5 as investors appeared to bet that McConnell would prevent Democrats from enacting a big increase in the corporate income tax rate. (Trump’s 2017 tax cuts reduced the corporate rate to 21% from 35%; Biden wants to take back half of the cut, raising the rate to 28%.)

On the other hand, a big new coronavirus relief package is less likely than if Democrats had taken the Senate, which still appears to be a long shot. That will weigh on economic growth in 2021. 

Biden will try to repair trade relations with allies that Trump sundered with such ill-advised gambits as tariffs on their products in the name of U.S. national security. He willrejoin the Paris climate accord, but, to the consternation of his green supporters, he says he won’t try to shut down fracking for shale oil and natural gas or adopt the liberals’Green New Deal. He may step up antitrust enforcement, which would be bad for the targets of government lawsuits but potentially good for their smaller rivals.

Biden’s earliest priority must and will be getting a grip on theCovid‑19 pandemic. For business, Trump’s greatest failing was to prioritize economic growth over human lives by playing down the coronavirus. That had the unintended consequence of harming both lives and livelihoods: Businesses ranging fromrestaurants toairlines are in worse shape than they would have been if the administration had combated the virus earlier and more aggressively. (Even after being hospitalized, Trump continues tobrush off mask-wearing.)

None of this is particularly controversial. True, Trump struck a chord with his base,especially in South Florida, when he said Biden “has handed control to the socialists and Marxists and left-wing extremists like his vice presidential candidate.” But the accusation didn’t ring true with a majority of voters, including some crossover Republicans, who sense that Biden is a moderate and that his running mate, Senator Kamala Harris of California, while unabashedly liberal, is a team player. Among Biden’s most trusted aides are holdovers from the Obama administration such as Bruce Reed, Tony Blinken, Jake Sullivan, and Anita Dunn. Not a socialist in the bunch.

Liberals say the perception that Obama saved the banks in 2008 and 2009 while letting homeowners go bust sowed the seeds ofTrumpism. “One of the things Democrats have learned is that unless there is real change, that working people really do feel a difference, we would be setting the stage for another Trump. A different Trump, but another Trump,” says Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute in Washington. “It is really important that economic growth is more broadly shared, so it doesn’t just go to the top 1%.”

There’s an unwritten rule in journalism that an article about the winner of a presidential election really ought to contain the phrase “now comes the hard part.” So: For Biden, now comes the hard part. He walked into a mess the last time he entered the White House, in 2009, but he was merely the veep, and the challenge was a recession, not an implacable virus. The country ismore divided now. Problems that once loomed in the future, like climate change, areright up in our faces. A heavy weight is settling onto shoulders that will be 78 years old in January.

Biden and his team would do well to study closely the Trump administration—not just for what it got wrong, but for what it got right. Before the pandemic hit, the U.S. economy was running strong, corporate profits were high, and unemployment rates were at half-century lows. A year ago the jobless rate for Black men touched 5.1%, the lowest since monthly record keeping began in 1972. That’s what economists call a “high-pressure economy.” When their preferred hiring pool runs dry, employers reach deeper into the well of available workers. Whether a Republican or a Democrat is in the White House, strong economic growth is the most powerful force for equal opportunity.

Democrats argue that the Trump expansion was merely a continuation of Obama’s, but that’s not entirely fair. The unemployment rate is like a spring—easier to compress when it’s high than when it’s already been pushed down. An overall rate of 3.5%, the level asrecently as February, is an undeniable success. While Trump doesn’t deserve all the credit, the tax cut he signed in December 2017 did contribute to the growth spurt by leaving more money in the pockets of Americans of all income levels (though the rich got thebiggest breaks) and reducing the taxation of corporate income.

Democrats agree that a tax cut was needed. Their complaint is that the 2017 bill showered too many of the benefits onrich individuals and big companies. Biden wants to eliminate the cuts for individuals earning more than $400,000 a year and raise the corporate income tax rate.

Presidents come into office intending to set the agenda, but the stream of history finds its own channel. “It’s very hard to get things done when you’re president even if you have a lot of political capital,” says Glenn Hubbard, a Columbia economics professor who was chairman of George W. Bush’s Council of Economic Advisers from 2001 to 2003.

That said, Trump did get a lot done, and though he’ll be remembered as the king of chaos, much of his agenda was conventionally Republican. His team managed topush deregulation of everything from internet privacy to nursing homes. They won support for reform of federal sentencing guidelines—a rarebipartisan measure. They gained Senate confirmation of three conservative Supreme Court justices andmore than 200 other federal judges. They raised military spending, reduced environmental protections, throttled back immigration and asylum—particularly from Muslim nations—streamlined drug approval, and eliminated the tax penalty for not having health insurance.

Trump wasn’t able to achieve everything he wanted. Only a fraction of the promised border wall is built, andMexico isn’t paying for it. U.S. troops are still in Afghanistan. There’s been no big infrastructure bill, even though both partiessay they want one. And he’s promised a “phenomenal” replacement for the Affordable Care Act so many times without delivering, it’s become a standing joke even among fellow Republicans.

Roughly speaking, the Trump term started strong and finished weak. “I would say that some of the biggest positive effect he had was literally right at the beginning,” when “businesspeople picked up their animal spirits,” says Hubbard. He says Trump was correct to push China harder than his predecessors had done but erred by trying to do it alone, pulling out of theTrans-Pacific Partnership talks and then levying steel and aluminum tariffs not only on China but also on Canada, Mexico, and Europe. Hubbard gives Trump especially poor marks for his response this year to theeconomic damage done by the pandemic. He says the White House left it to Congress to draft the Coronavirus Aid, Relief, and Economic Security Act, poorly executed the Paycheck Protection Program, and quixotically pushed for a postponement of payroll tax deductions that big employerslargely ignored.

Biden won’t find things any easier. First there’s the struggle for the soul of the Democratic Party, which will be waged from door to door in the West Wing. Then there’s Republican opposition, especially assuming Republicans keep control of the Senate. McConnell said in 2010, “The single most important thing we want to achieve is for President Obama to be a one-term president,” and he hasn’t gotten more cooperative since. Biden, a longtime senator with deep respect for the body’s traditions, seems unlikely to push for killing the filibuster.

Biden promises to reverse Trump’s visa restrictions, reinstate protections against housing discrimination that Trump suspended, toughen gun laws, and build on Obamacare by adding apublic health insurance option. But he isn’t that far apart from Trump on some other key issues, including rebuilding the U.S. manufacturing base andrelations with China, which may be the most important matter for the U.S., foreign or domestic, for years to come. “If you close your eyes when Biden’s talking about China it could be Trump,” says Hubbard. There are differences, to be sure: Biden will likely be more predictable than Trump with respect to China and work through established multilateral organizations, such as the World Trade Organization and the United Nations. On the other hand, he will almost certainly confront China on human-rights issues—in its Xinjiang Uighur Autonomous Region, for one—that were of little interest to Trump.

Biden’s first test, even before taking office, will be his ability to help congressional Democrats cut a deal with the GOP on coronavirus relief. He doesn’t want to take the oath of office in January with the economy in shambles. On Nov. 4, Bloomberg Economics estimated that if Biden won, the relief package would amount to $2 trillion with a Democrat-controlled Senate but only $500 billion with a Senate that remained in control of the opposition party (which appears to be the case). Divided government is never easy.

Then again, if all Biden manages in four years is to bring back a measure of civility and decency and restore the ordinary functions of government, that would be enough for many who voted for him. On March 4, 1865, with the Civil War winding down, President Lincoln vowed in his second inaugural address to “bind up the nation’s wounds.” That should be Joe Biden’s aspiration as well.
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