Global markets have continued to rally in recent days as Democrat Joe Biden looked set to take the presidency from Donald Trump, with only a few states remaining to tally up the votes from Tuesday’s elections.
According to Forbes, the economy under President Biden will look a lot like under President Trump, surprisingly enough. It’s a public secret that presidents often don’t fulfill campaign promises. And when they do, things take time. Ultimately a Biden administration will make impact on the economy—which will predominantly be felt after his term of office.
The greatest impact on the course of the economy in 2021 and 2022 will have Covid-19 pandemic. Government policy will have little impact in changing the course of the disease, apart from approving treatments and vaccines. A Biden administration may take a less political approach and hasten approvals.
When Biden does tackle an issue, most changes must be enacted by Congress, survive legal challenges which could rise to the Supreme Court, and be administered by a bureaucracy that will outlast the presidential term. Some change can be made by executive order, but they tend to be more limited in scope.
With Republican control of the Senate continued, Biden will have little chance to enact sweeping legislative changes. With all of those limitations, the Biden administration will certainly work to get another “stimulus” bill enacted. The quotation marks are used because a stimulus bill will not stimulate economy but just shift money from some pockets to others.
The stimulus impact will favour landlords of lower-cost apartments, banks with many consumer loans, and other companies that serve the unemployed who have lost their jobs in the pandemic.
The largest potential impact of a Biden presidency is to be tax increases. The House of Representatives will certainly support the new president, but the Senate will be hard to convince, unless the Senate does turn Democrat.
The impact will be felt in years to come, not immediately. Experts warn that, over time, disincentives to investment and work will reduce the growth rate of the economy by a small but noticeable amount.
Subsequent on Biden’s agenda with large economic impacts is an infrastructure program. His proposal entails $1.3 trillion of spending over 10 years, the largest component being $400 billion for “clean energy research and innovation.” Some stepped-down version of that idea is likely, but Congress will prefer more tangible projects that are ready to show results.
Labor policy will certainly be more union-friendly than under the Trump administration. Immigration policy will probably relax a little in a Biden administration, but keep in mind that Democrats usually worry that foreign immigrants will compete with U.S. workers and thus lower wage rates.
International trade policy will continue the country’s drift away from globalization, but with a much nicer tone of voice than President Trump used. Historically Democrats were more favourable to tariffs and other trade limitations. Only in the Trump administration did the GOP switch sides.