Joe Biden is finally going to take oath as the President of the United States of America (US) after prolonged violence fuelled by angry Trump supporters. Biden had served as the Vice President (VP) during Barack Obama’s tenure. As President, Biden will probably try to create an example of not abandoning accountabilities like his Republican predecessor. He is already under pressure as the pandemic has badly affected the country’s economic stability. But even before the pandemic hit, the American economy was not in good health. It was dealing with issues concerning unemployment, low growth of income, unaffordable healthcare facilities, and expensive education.
Significantly, the last two Democratic governments also faced a tough situation. When Obama took power in the first term, he had to face the challenged of recession and more than 3.6 million job losses. This time round, Biden is encountering economic and health emergencies. But he does not lack the experience in dealing with economic problems. Then President Obama, along with Biden had introduced an $800 billion recovery plan and channelised the ‘Affordable Care Act’ through the Congress. Now all eyes will be on Biden’s economic policies. His strategies related to foreign trade, employment, education, healthcare, economic co-operation, defence, and the immigration policy will also be under scrutiny.
Present job disparity
The Bureau of Economic Analysis (BEA) has stated that the real GDP growth in 2020 has been -5.6% and it is expected to be 4.2% in 2021. The Congressional Budget Office (CBO) has informed that the unemployment rate might be 5.1% points higher and the employment-to-population ratio will be 4.8% points lower. The CBO additionally expects that inflation and interest rates on federal borrowing will remain relatively low due to subdued economic activity and weak labour market conditions. When the pandemic initially hit, the unemployment rate surged from 3.5% in February to 14.7% in April. The size of the labour force fell by more than 8 million. The BEA additionally informed that the yearly unemployment rate during 2020 in the country was 11.5%.
Disparity among races
The income disparity has always been prominent in different communities in the US. A Deloitte report declared that presently, poverty rates among African Americans and Hispanics are 20.8% and 17.6%, respectively, which is higher than non-Hispanic whites - that is at 8.1%.
Since the recession, all Americans have faced a drop in income but African-Americans have suffered the most. Even after Obama took the charge, he could not do much. The United States Census Bureau stated that during 2007-2010, when the country was dealing with a massive economic fall, the income growth rate of African Americans went down to -10%. Later in the 2010-2018 period, the rate went up to 11.6%. Concerning the low wage jobs, the Bureau added, during November 2007-June 2009, employment rates were lowest for African Americans at -6.9%. In the present status, between February 2020 and May 2020, the Asian people suffered enormously and faced an employment rate of -36%. So, if the marginal communities of the US trust the Biden-Harris duo this time, they will have to be rather cautious.
Where is the focus?
Unaffordable healthcare system is another troubling issue for Americans. To mitigate this, along with new policies, Biden will have to run the ‘Obamacare’ as promised to insure 97% of Americans with $750 billion for the upcoming 10 years. Along with healthcare, for the education sector, Biden is planning to forgive all undergraduate tuition-related federal student debt for those people who make up to $125,000 and attend two and four years of public colleges and universities. By providing affordable healthcare and education, Biden is expected to ease the economic disparity in his country. In addition, creating more jobs will be of primary importance.
Tanmoyee Banerjee, Associate Professor, Department of Economics, Jadavpur University, told BE, “Like the rest of the world, the US has also suffered greatly due to the pandemic. However, the US GDP and employment scenario were not looking healthy even before the pandemic. Another obstacle that Joe Biden will face is a Republican Senate. Apart from this, the left wing of the Democratic Party will demand more government spending on employment creation and the social sector. Amidst all these, we can expect that Joe Biden will be investing in infrastructure, social security and clean energy as promised in his election campaign. A tax increase for corporates and the highest income group may be forthcoming. We may expect that in future, a fiscal stimulus will be provided to households, workers, and small businesses. There will be effort for the creation of new jobs and a green economy.”
Biden is looking to create around five million new jobs in manufacturing and innovation sectors and for ensuring the federal minimum wage at $15 per hour. The country has been the major target for the Chinese export market and now Biden has promised to consolidate the domestic market by hardening the present ‘Buy American’ laws. He is going to invest $700 billion, particularly in manufacturing and technology; $400 billion for purchasing domestic goods and services; and $300 billion will be going into Research and Development (R&D).
Biden is going to govern a polarised country, both politically and socially. He needs to build trust. By promoting financial aid and softening immigration policies, he might take a chance.