According to the NY Times, Biden’s incoming economic team has one goal: Get back to the booming pre-Covid economy of the Trump administration:
As President-elect Joseph R. Biden, Jr. prepares to take office this week, his administration and the Federal Reserve are pointed toward a singular economic goal: Get the job market back to where it was before the pandemic hit.
The humming labor backdrop that existed 11 months ago — with 3.5 percent unemployment, stable or rising work force participation and steadily climbing wages — turned out to be a recipe for lifting all boats, creating economic opportunities for long-disenfranchised groups and lowering poverty rates. And price gains remained manageable and even a touch on the low side. That contrasts with efforts to push the labor market’s limits in the 1960s, which are widely blamed for laying the groundwork for runaway inflation…
“That’s really the thing that we’re most focused on — is getting back to a strong labor market quickly enough that people’s lives can get back to where they want to be,” Mr. Powell said. “We were in a good place in February of 2020, and we think we can get back there, I would say, much sooner than we had feared.”
Hmmm…I wonder if that kind of praise of the Trump economy would have been published prior to November. In any case, Biden’s plan to get there is apparently to spend, spend, spend.
President-elect Joseph R. Biden Jr. on Thursday proposed a $1.9 trillion rescue package to combat the economic downturn and the Covid-19 crisis, outlining the type of sweeping aid that Democrats have demanded for months and signaling the shift in the federal government’s pandemic response as Mr. Biden prepares to take office.
Frankly, this isn’t the first big spending bill tied to the COVID downturn. We just had a nearly one trillion dollar bill last month and obviously that hasn’t restored the economy to full health. This bill won’t either. So what else has Biden got?
According to a story at CNN Business today, the answer is not much. The story was originally titled “Joe Biden doesn’t have a magic wand to fix the economy.”
Joe Biden last week proposed a $1.9 trillion stimulus bill, part of a historically ambitious plan to combat an economic crisis.
But many economists and business leaders agree that no amount of government assistance to individuals and small businesses can fix the economy until the underlying cause of the problems — the Covid-19 pandemic — has been defeated. At best, the combination of the $900 billion plan passed in December, and this plan from the president-elect, can only help the economy to continue to tread water until the pandemic is under control.
“This is a very large package, but it’s about helping the economy hang together as well as it can hang together until the end of the pandemic,” said Mark Zandi, chief economist at Moody’s Analytics…
“We get a lot growth in GDP up front, but it’ll take 18-24 months to get all those jobs back,” said Zandi. “A lot of people just can’t go back to work until the pandemic is in the rearview mirror.”
In other words, Biden can keep doing the same things we’ve already been doing to try to juice growth and prevent things from getting worse but that’s not a magic wand because it doesn’t solve the real problem, which is COVID.
As an example, the virus is still spreading like crazy here in California and is expected to have another peak in March when the new, more easily transmitted variant becomes the dominant strain. At the moment, most of California is still under a lockdown because of that, one that could last for months. There’s just no way we’re getting people back to work until this changes and that won’t happen before spring and maybe not before summer.
This summer we may start to approach herd immunity and most people at risk of serious illness and death will have been vaccinated. Maybe then things can really start to reopen. But the damage done is not going to be undone overnight. Tens of thousands of restaurants and retail stores have closed permanently. They aren’t coming back. New businesses have to built up to replace them and that can’t happen in a matter of months. That’s one reason I was so angry when Biden was talking as if this was a simple matter during the campaign. Getting back to the pre-COVID economy is going to take a long time most likely no matter what the Biden administration does.