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Original Title: Will Biden Bring a More United and Open America? How likely is the large-scale stimulus to land?
The paper journalist Jiang Mengying
Editor’s noteAccording to various foreign media reports, after several days of stalemate in the 2020 US presidential election, Democratic candidate Biden took the initiative to win Pennsylvania and garnered more than 270 electoral votes needed to win the election. Barring accidents, Biden, 78, will assume the 46th president of the United States in January of next year. With what economic policy will you take the stage? How is it different from Trump’s policy? The newspaper classifies and analyzes the news one by one and describes a different America that Biden wants to bring to the readers.
“We are the United States of America. If we do it together, there is nothing we cannot do.”
On the morning of November 8, Beijing time, Biden, the US Democratic presidential candidate, said in his victory speech. He also said that it is time for Americans to come together and heal the gap.
With Biden’s victory, can we see a major change in America? Can you see a different America and the world?
A more united and open America?
Trump was elected four years ago because of his structural factors, that is, there is a huge gap between the American elite and ordinary people (especially manual workers and farmers).
However, Peter Petri, a non-resident senior fellow at the John Thornton Center for Chinese Studies at the Brookings Institution, said in an interview with The Paper that the United States is a very diverse country with many different opinions and opinions. crowd. He doesn’t think ordinary people belong to the Trump administration.
What will happen if Biden becomes the 46th president of the United States?
Robert Rubin, the 70th Secretary of the Treasury of the United States, presented at the second Financial Summit of the Bund that he and Biden have known each other for more than 35 years. Biden is a person who values the feelings of others and is willing to cooperate with others, including the Republican Party on specific policies. This is true throughout the world and will forge allies. Internationally, Biden should cooperate more with other countries.
Rubin frankly said that there are many problems in American society, and Biden will bring people together rather than causing divisions and divisions. Rubin has confidence in Biden in this regard. Also, regarding the appointment of many new officers by Biden, Rubin believes that they will all be capable, wise, and down-to-earth people.
Hang Seng Bank China chief economist Wang Dan also told The Paper that if Trump remains in office, America will be more like a white America; if Biden is elected, this America will be the United States of the peoples of the world, because Biden welcomes immigrants. , Promotion of cultural diversity. The values of the two are quite different. Without a doubt, Biden will take America in a different direction.
The first task is to respond to the epidemic.
According to CNN, responding to the new corona epidemic will become the top priority of Biden’s tenure.
Biden said in a national address on November 7 local time that he will announce a 12-member COVID-19 response task force at 9 local time. Biden reportedly announced the members of the epidemic task force even before his announcement from members of the government.
Biden’s “transition website”, BuildBackBetter.com, announced on November 8 the four priorities for the next term, including responding to the new corona epidemic, promoting economic recovery, restoring racial equality and addressing the climate change. The website lists a “seven-point plan” that includes “free, reliable, routine COVID-19 testing” for all Americans.
Liu Ligang, Citibank’s chief China economist, said in an interview with outlets like The Paper that, unlike the Trump administration, Biden’s main task is to control the epidemic so that the US economy can recover and rate unemployment can be reduced further. And going back to trade policy is a problem in the second half of 2021.
Will there be a “Goldilocks economy” in the United States?
The financial markets have been anticipating Biden’s election victory and the “blue wave” of Democrats taking most seats in the House of Representatives and the Senate.
However, due to the need to recount the votes, the outcome of the presidential elections in Georgia has yet to be determined. Not only that, the simultaneous election of the two senators in the state has also reached a stalemate. The two candidates representing the Democratic and Republican parties respectively got less than half of the votes. According to the electoral rules, the decision of the state senator will be carried out in early January next year. selected.
Among the election results of the four senators that have not yet been announced, the Republican Party has the upper hand in the senatorial elections in North Carolina and Alaska, and has a high probability of winning; the only hope that the Democrats will regain dominance in the Senate is in Georgia. The second round of the Georgia Senate will take place on January 5, which means that the suspension of the Senate’s dominance will continue until the beginning of January.
Although Democrats are unlikely to seize both senatorial seats in Georgia, once this goal is achieved, Democrats and Republicans will each have 50 Senate seats. In accordance with US law, the new Vice President of the United States will be elected President of the Senate, thus increasing one vote. Then, according to the current presidential elections, Biden and Harris are expected to serve as the new president and vice president. Democrats will gain a weak advantage in the Senate and their dream of unifying the two houses of Congress will come true.
Rubin believes that if Biden wins, it will mean major changes in many aspects of American politics. Assuming Democrats can win a majority of Senate seats, Biden will lead an immediate, large-scale fiscal stimulus package. If Democrats cannot have a majority in the Senate, they can also be enforced through executive orders. Rubin thinks there will be a full-scale stimulus package after Bi takes the stage. It will make a lot of public investment through progressive tax increases. Inequality in the United States is also increasing. Biden will take several steps to reduce or reverse this inequality. One way is to increase public investment through a progressive tax mechanism. Actively addressing climate change will also be the focus of the Biden administration, who already has a detailed plan to address climate change, which is a 180-degree turn from the policies of the current Trump administration.
The market predicts that there will be a “blue wave” before the election, meaning that Biden will not only return to the White House, but the Democratic Party will also have a majority in the Senate. Since then, fiscal policy expansion has increased and the US economy may recover faster. At the same time, inflation will increase.
Liu Ligang said this will mean that under the Fed’s current policy of zero interest rates and unlimited quantitative easing, the real interest rate in the United States may be negative. The rate of return on the US dollar will also be relatively low, causing capital to flow from the US capital markets to emerging markets, resulting in the appreciation of emerging market currencies and the depreciation of the US dollar.
However, the “blue wave” awaiting the market is difficult to emerge. Democrats have lost several seats in Congress. In the Senate, even if the Georgia Senate is re-elected after January next year, it will be difficult for Democrats to have a majority in the Senate. There is no “blue wave”. Biden’s two main economic policies, namely large-scale infrastructure investment, fiscal expansion and the New Deal for green energy, can be held back by not having a majority in the Senate. As a result, the recovery in the US economy may not be as strong as imagined, and the expansion of fiscal stimulus will also be stifled. So the dollar may not be as weak as you imagine, and capital outflows won’t be particularly large. Additionally, if the Senate has a Republican majority, Biden’s tax increase policy for businesses and the tax increase policy for high-income individuals in the United States will also be shelved. Wall Street won’t have to worry too much about the negative impact on American business profits from high taxes in the future.
Liu Ligang further pointed out that the United States may enter the Goldilocks situation in future financial markets (note: “Goldilocks Economy” refers to an economy that maintains moderate growth and low inflation). This is a good environment, indicating that the low tax policy will continue in the future, and the government does not have much expansion of fiscal policy, the US stock market will perform well, especially the high valuation of tech stocks may continue for a while. time.
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Editor-in-charge: Zhang Mei
