While the recent US Presidential Election has left a number of issues unresolved, one thing is clear. The US electorate which vaulted Joe Biden into power want him to be a magician; to fight the Covid-19 pandemic and accelerate economic growth at the same time. It is not clear whether Biden will be able to do that since it is a tough call. His predecessor Donald Trump could not do it and lost his re-election bid. Not only are the two goals apparently at loggerheads with each other, they have not worked anywhere in the world except for in New Zealand. Biden has been espousing lockdown from the get-go and his opponent Donald Trump has even coined a new sobriquet, “Lockdown Joe”! The country can’t expect otherwise from the Biden presidency. The important question now is, can Biden deliver on his promises to fight the pandemic, listen to the “pro-lockdown” camp, and still keep the economic recovery going?

There are clear signs the economic recovery is in full swing. Last quarter, the GDP registered a whopping 33.3 percent growth rate and the unemployment rate dropped to 6.9 percent in October. Businesses are gradually learning to keep chugging along in the face of a second wave, and Pfizer has announced its vaccine is over 90 percent effective, though it is not known how soon it will be available. Clearly the new president can use the bully pulpit to promote the safety of the vaccine and also to boost public faith in its efficacy. But, in the meantime, Biden has to fight the virus and coax Congress to provide an additional stimulus package for the economy. Whether the Republicans retain their majority in the Senate is still up in the air, but they have been very reluctant to go with the House and pass a second stimulus bill before the elections.

Joe Biden will face other challenges from his own party as he tries to balance the various factions, particularly the group of liberals led by Bernie Sanders and the conservatives and moderates from the South. Before the 2020 elections, the Democrats had a solid majority in the House but in this recent elections, many of the “New Age” liberals lost their seats. This will make it harder for Biden to get some of the key items in the Election Manifesto passed by the House, let alone by the Senate which is still controlled by Mitch McConnell, the nemesis of Obama.

The Democrat’s Election Manifesto has a number of economic measures that will also trigger some anxieties. First of all, higher taxes will soon follow if US Congress is willing to oblige the new president. Biden has repeatedly declared his intention to roll back the Trump-era tax cuts. During a fund-raiser last summer, he said, “I’m going to get rid of the bulk of Trump’s USD 2 trillion tax cut. And a lot of you may not like that but I’m going to close loopholes like capital gains and stepped-up basis.”

Secondly, Biden will probably strengthen regulation on big business and like his mentor, Barack Obama, revive the institutions that he and Obama built during 2009-2017, and were weakened or decimated by Donald Trump. The practices and infractions committed by Wall Street, the big conglomerates and the energy sector will come under increased scrutiny. Biden plans to create a Climate Justice Division within the US Department of Justice (DOJ). The regulatory body is to be tasked with enforcing new rules governing the relationship between industry and environment.

Thirdly, Biden has promised to take the US back to the Paris Climate Agreement, ban fracking, and come down hard on carbon emissions. The Department of Justice and the Environmental Protection Agency is likely to once again enforce the Clean Air Act, the Clean Power Plan, and other executive orders to regulate coal-fired power plants and fossil fuels. Whether this will have a negative impact on growth and employment in the energy sector is an open question. However, Biden’s commitment toward “net-zero carbon emissions by 2050” will impact several markets. Some states, including Pennsylvania, Texas, and New Mexico can expect to see job losses in excess of 500,000.

It is unlikely that there will be a major impact on the economy in the first year of Biden’s presidency. He is likely to tread waters very carefully given the reality of the situation, the sky-rocketing budget deficit, and the multiple crises the country is facing. But, once the pandemic has been contained, either due to enhanced lockdown policies or the widespread availability of a vaccine, the challenges and the hard choices is likely to rise to the surface of the national discourse.

David Gergen, Professor at the Harvard Kennedy School and former White House adviser to four presidents including Clinton, summarises well the dilemma Biden will eventually be confronted with. He wrote, “Biden campaigned with bold pledges to strengthen health care, contain the coronavirus pandemic, pump trillions into the economy, address racial and social inequities, and save the planet from climate disaster.” Gergen then wonders how “Biden will navigate the cross-pressures within his own party, where squabbles are already breaking out.”

Let us now consider the other major leftover from the Trump era, the tariffs on Chinese imports to correct the US balance of trade. It is obvious that China would love to see the USA take a more conciliatory approach towards the multitude of issues that bedevilled the relationship of these two countries during the last four years. There is no doubt that Biden will take a second look at the trade relations with China, and may even lower tariffs on some imports. During an interview with National Public Radio (NPR) in August when asked “Would you keep the tariffs?”, Biden said, “No. Hey, look, who said Trump’s idea’s a good one? Manufacturing has gone into a recession. Agriculture lost billions of dollars that taxpayers had to pay. We’re going after China in the wrong way.”

In short, the contrasts between the policies of the incumbent Donald Trump and the incoming Joe Biden could not be any sharper. The former was for deregulation and a minimalist tax structure while the latter favours higher corporate tax rates and stricter environmental protections. We will see the net changes in three main areas: taxes, foreign trade, and the regulatory regime.

As for the next president’s economic priorities, fortunately, his must-do list is very short. Invest in infrastructure, get to work on a new stimulus bill, and strengthen the healthcare services. And the rest of the economy will take care of itself.

Dr Abdullah Shibli is an economist and currently works in information technology. He wishes to acknowledge the contributions and feedback of his associates: Dr Syed Mushtaque Ahmed (Oklahoma), Dr Mazhar Islam (Florida), and Dr Ashraf Nakib Ullah (Texas). Opinion expressed here are the writer’s own.

PHOTO: AFP