Joe Biden will face one of the toughest economic futures of a President when he takes the reins from Donald Trump in January, The Guardian’s economic editor Larry Elliott says.
Biden, who won the US election last week with more than 78 million popular votes and 290 electoral college votes, is set to take office on 20 January, however, Trump remains defiant, filing lawsuits in multiple states claiming voter fraud and has refused to concede defeat. Photo: AFP
The election came down to a question of who Americans trusted more to rid their country of Covid and stimulating the economy once it’s gone.
Elliott told Jim Mora that Trump did remarkably well in the election given more than 240,000 Americans have died since the pandemic began and large parts of the economy were forced to shut down in 2020.
He said Biden’s problem will be that the economy will still be going backwards when he’s in charge.
“Trump is going to do absolutely nothing to help him in the meantime because that’s the sort of person Trump is. [Biden] is going to face one heck of an economic challenge, Trump is going to leave him a really deadly poisoned pill.”
The two methods for stimulating the economy are monetary and fiscal policy – monetary being what central banks can do i.e. lowering interest rates and quantitative easing (large scale purchasing of government bonds/assets) – and fiscal being what the government does i.e. spending, taxes and increasing its budget deficit.
Biden will struggle to get any big fiscal plan approved by the Republican-majority senate, leading to the Federal Reserve to pick up the slack, Elliott says.
He added that while Biden has talked big on progressive and green policy, he’s unlikely to put those words into action.
“Biden is the consummate Washington insider – he’s a middle of the road politician, he got the nomination because he wasn’t Bernie Sanders, he’ll think he won because he was a cautious centrist politician… he won’t be as radical in climate change policies and trade policies as people might think. I think there’ll be a degree of continuity between him and Trump.”
Elliott also expected Biden would keep Trump’s hard-line stance on China when it comes to trade to appease the economic nationalists in America.
“[Biden’s] looked at those 70 million votes that Trump got and thought to himself ‘economic nationalism plays quite well in the US at the moment, being anti-China plays quite well in the US at the moment’.
“I think he will maintain a sort of fairly American first approach to trade, he’ll be quite cautious… so the rest of the world, it’s good I think, he’ll be more engaged, he’ll be less overtly nationalistic and less overtly protectionist, but I don’t think the substance of US policy is going to change as much as some people might hope.”
