Bidenomics economic policy: Need to be daring and more ambitious for the US economy

Bidenomics economic policy: Need to be daring and more ambitious for the US economy

The Economist (The Economist) of the UK, Bidenomics – the economic policies of the candidate for president of the Democratic Party should be more daring and ambitious.

Democratic presidential candidate Joe Biden – age 76 – speaks at a campaign event in Wilmington, Delaware. Source: Reuters

Fear of a turn to the left under Mr. Biden

The two presidential candidates faced each other in the first debate before US voters went to the polls on November 3.

Democrat Joe Biden spent the rest of the day mocking Trump for bringing the country down. Meanwhile, President Donald Trump has turned it into a verbal “brawl”, even making people doubt the correctness of the electoral processes. Mr. Trump also did what he hoped would be a knockdown of Mr. Biden, accusing the opponent of being a weak man who would succumb to the leftist’s plans.

to significantly expand government and paralyze business.

Some American business leaders fear such a turn to the left under Mr. Biden. However, this allegation is not correct. Mr. Biden has refuted the Utopia of the left’s utopian ideas. His tax and spending proposals are justified. They only lead to a slightly larger state and an attempt to tackle the real problems facing the United States, including poor quality infrastructure, climate change, and the devastation of businesses. small business. In fact, the weakness in Mr. Biden’s plans is that they have not been sweeping enough in some areas.

COVID-19 exposed many of the economic weaknesses of the US administration

When President Trump comes to power in 2017, he hopes to stimulate the business crowd sentiment by providing bosses with a hotline that connects directly to the Oval Office as well as cutting taxes and taxes. administrative procedures. Before COVID-19, this plan was effective, supported by the loose monetary policy of the US Federal Reserve (Fed). Small business confidence hit a 30-year high; stocks soared and the wages of the poorest quarter of workers rose 4.7 percent a year, the fastest since 2008. Voters consider economic problems a top priority and if not because of the SARS virus. CoV-2, that economic performance may have been enough to get Trump re-elected.

GDP in the second quarter of the US decreased by 32.9% compared with the same period last year, the lowest level since 1947. Source: AFP

GDP in the second quarter of the US decreased by 32.9% compared with the same period last year, the lowest level since 1947. Source: AFP

However, the epidemic exposed many shortcomings of the incumbent government. Long-term problems have emerged, including poor infrastructure and lax social safety nets. Business dynamics are still weak. Investments fall and new companies are being formed while large companies are increasingly influencing. Mr. Trump’s chaotic style, which includes openly criticizing businesses and attacks on the rule of law, is a tax on growth. The confrontation with China has won few concessions from it, while destabilizing the global trading system.

What is Bidenomics?

If he becomes the 46th president of the United States, Mr. Biden needs to overcome these problems by becoming a competent administrator who believes in institutions, heeding advice and cared about outcomes. fruit. Those qualities will be needed by 2021, as perhaps 5 million people will face long-term unemployment and many small companies facing bankruptcy.

Mr. Biden’s economic priority will be to pass a huge “recovery” bill, worth around US $ 2-3 trillion, depending on whether a stimulus plan is approved by Congress before election. sent or not. This will include short-term expenditures, boosting unemployment insurance and assisting state and local governments, which are facing budget deficits.

Mr. Biden should also extend grants or loans to small businesses that don’t get as much support as large ones. Reducing tensions with China, soothing the market is one of the top priorities that should be given. And if vaccines do emerge, a cooperative approach instead of a temporary foreign trade would make global distribution easier, allowing borders to reopen and trade to recover faster.

Presidential candidate Joe Boden on a tour of a metal fabrication facility in Dunmore, Pennsylvania. Source AP

Presidential candidate Joe Boden on a tour of a metal fabrication facility in Dunmore, Pennsylvania. Source AP

The restoration bill will also aim to “rebuild better” by focusing on some of the enduring US issues that have been Biden’s priority for many years. Noteworthy is the plan for a boom in climate-friendly infrastructure projects to remedy a lack of investment for decades: bridges in the US on average were built 43 years ago. . Government research and development spending has fallen from more than 1.5% of GDP in 1960 to 0.7% today, while China poses a serious challenge to America’s science. Mr. Biden will reverse that too, with more research on renewable technologies and energy. He will remove Mr. Trump’s harsh restrictions on immigration that threaten America’s competitiveness, and he wants to raise middle-class living standards and people’s ability to advance. . That means spending more on education, health care and housing, and a $ 15 minimum wage. This benefits 17 million workers.

This is not a socialist’s agenda. Mr. Biden has ignored leftist fantasies, including a proposed Medicare For All (Medical Care for Every Home), a nuclear power ban and a job security program. His plans are of moderate size and scope, increasing annual public spending by 3% of GDP, on the assumption that they can all be approved by the Senate. This is less than the 16-23% rise of other Democrats such as Elizabeth Warren and Bernie Sanders. He will also raise taxes to cover about half of approved spending, with higher taxes targeting companies and the wealthy. This will reduce the after-tax profit of companies by up to 12% and the income of the top 1% of the top earners to decrease by 14%. If you are rich, it will be annoying, but not a disaster.

The risk of “Bidenomics” is that Biden’s pragmatism will make him not bold enough

Sometimes Mr. Biden fails to resolve conflicting purposes. For example, he was right in advocating for the advancement of all walks of life as well as a better safety net for workers who lost their jobs. His plans range from more affordable housing to free public universities. But if equipped with these social security buffers, he should be ready to welcome greater creative destruction to raise the standard of living in the long run. Instead, Mr. Biden’s instinct is to protect companies and he doesn’t have too much to say about fostering competition, including reducing tech monopolies. Existing companies and insiders often exploit complex regulations to create barriers to market entry. Biden’s plans were confined to administrative procedures.

Mr. Biden ran with the slogan

Mr. Biden ran under the slogan “Build back better” – Rebuild better. Source: Reuters,

Biden’s climate policy represents real progress. The construction of green grids and charging grids makes sense because the private sector is often reluctant to face such initiatives. But, again, its effect will be diminished by the regulation that 40% of spending must go to disadvantaged communities and privilege domestic suppliers: this is a recipe for inferiority. effective. His plans to cut emissions set goals, but avoid carbon taxes, which will harness the power of the capital market to reallocate resources. It was a missed opportunity. Just last month, the Business Roundtable, an organization that represents the US company, said it supported carbon taxation.

This lack of audacity also reflects the lack of a fully developed strategy. Mr. Biden is an advocate of free trade but he will not be quick to lift tariffs and his plan is to adopt small-scale protectionism, for example by emphasizing goods must be transported. on American ships. That would complicate his difficult immediate task: creating a new framework for regulating economic relations with China, including persuading US allies to support them even when The country is also trying to adopt protectionism.

To make Bidenomics a reality, Mr. Biden still needs to win first in November, so his ambiguity is understandable. But there is a risk that he is confident of victory and thinks that just bringing the economy back to growth and restoring its governance capabilities will be enough to get America on the right track. If Mr. Biden wants to reform America’s economy and ensure America remains at the forefront of the rich world for decades to come, he needs to be more daring. On the threshold of power, the market is questioning whether Mr. Biden should be “strong hand” and express more ambitious?

The Left: Simply defined, is a political tendency based on egalitarianism with the goal of achieving equality for all regardless of differences in competence, Personal characteristics, working capacity and often using tools are the State’s intervention with the economy.

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