海角大神

When Joe Biden steps into the White House on Jan. 20, Inauguration Day, it won鈥檛 be just the furnishings that look familiar. The economy is wobbling after a severe downturn, much as it was in 2009, when President Barack Obama took office with Mr. Biden as vice president.聽

Yet for President-elect Biden, today鈥檚 political landscape is vastly different. It has grown tougher on issues such as trade and China policy. Since the Great Recession, economic thinking has evolved toward greater flexibility when it comes to government deficits.聽

And while the economic challenge does not look as dire as it did in 2008, it鈥檚 clear Mr. Biden will have less political maneuvering room than either Mr. Obama or President Donald Trump, who both took office with solid majorities in both houses of Congress. The U.S. Senate will operate with a ultra-thin power balance, whichever party wins聽two January runoffs in Georgia.

This political reality puts a sharp constraint on hopes within the Democratic base for sweeping economic reforms 鈥� or fears among Republicans that Mr. Biden will lead a sharp turn toward 鈥渟ocialism.鈥�

鈥淣o matter what happens in Georgia, he has a virtually split Senate and a razor鈥檚 edge in the House, so anything that gets done will require bipartisan legislation,鈥� says Robert Bixby, director of The Concord Coalition, a nonpartisan group focused on federal debt. 鈥淏iden is probably a good president to deal with this situation.鈥�

It won鈥檛 be easy. The emergency stimulus passed in the spring has helped the economy avoid a deeper and more prolonged recession, but determining how much more stimulus is still needed depends on how one views the recovery. By some income measures, it had mostly rebounded by this fall. Measured by unemployment, there鈥檚 still a long way to go 鈥� and the recovery is slowing. In November, the economy added only about 245,000 new jobs, the smallest total in five months of steadily declining employment gains. The U.S. still has 9.8 million fewer jobs than it did before the pandemic hit in March.

Inauguration paired with big U.S. risks

If Congress fails to act, specific stimulus programs that provided some 12 million Americans unemployment benefits and up to 87 million workers access to paid leave for pandemic-related health issues will expire this month.聽

Then there鈥檚 the pandemic itself, which induced the slowdown in the first place. Until it鈥檚 brought under control, the prospects of a full economic recovery are nil.聽聽

鈥淭here鈥檚 a great deal of uncertainty,鈥� says Lee Branstetter, professor of economics and public policy at Carnegie Mellon University in Pittsburgh. But 鈥渁t the moment, the federal government can borrow at an inflation-adjusted rate of zero, even less.鈥� So, he adds, 鈥渢he balance of risks seems to clearly be in the direction of doing too little now,鈥� while taking ambitious action carries relatively low costs.聽

Some kind of stimulus is likely to pass this year. House Speaker Nancy Pelosi is negotiating with Senate Majority Leader Mitch McConnell over a $908 billion plan put together by a bipartisan group of senators.聽

Even should that fail, Congress must pass a massive spending bill this month to avoid a government shutdown, says Bill Hoagland, longtime Republican staff director of the Senate Budget Committee and now senior vice president of the Bipartisan Policy Center in Washington. Thus, while it might not be called a stimulus, the new spending bill would include some kind of extension on federal unemployment insurance, employment insurance, and some short term assistance to small businesses, he predicts.聽

Whatever Democrats get during the lame-duck session, they will see it as a down payment for a more ambitious stimulus early next year, Mr. Hoagland adds.

鈥淐ongress and President Trump must get a deal done for the American people,鈥� President-elect Biden said Friday. 鈥淏ut any package passed in the lame-duck session is not enough. ... Congress will need to act again in January.鈥�

Biden priorities

Mr. Biden is proposing not only to get the economy back on track but, as he puts it, to 鈥渂uild back better.鈥� He wants to spend $7.3 trillion in new funds over 10 years to improve the nation鈥檚 roads, bridges, and other infrastructure; boost research and development in manufacturing;聽address climate change聽by encouraging sustainable energy; eliminate loopholes in 鈥渂uy American鈥� rules for government contracts; and help the working class through a variety of programs from making community college free to universal preschool, affordable child care, and aid for renting and buying homes.

鈥淲e are once again living through one of the worst job crises since the Great Depression,鈥� said Cecilia Rouse, the nominee for chair of the Council of Economic Advisers (CEA), last week when Mr. Biden introduced his economic team in Wilmington, Delaware. 鈥淪tructural inequities that have always existed in the economy are being exacerbated like never before. This is a moment of urgency and opportunity unlike any we鈥檝e faced in modern times.鈥�

Ms. Rouse, an economist and currently a dean at Princeton University, would be the first Black person to head the CEA if the Senate confirms her.

Mr. Biden鈥檚 picks for his economic team reflect a focus not only on diversity but also聽on less-advantaged Americans. 鈥淭he people he鈥檚 putting in place shows this is going to be a workers focused administration,鈥� said Tom Conway, president of United Steelworkers labor union, in a recent online event sponsored by the Alliance for American Manufacturing.

Those picks include Janet Yellen for Treasury secretary. Ms. Yellen is widely respected for her former stints as head of the Federal Reserve and as chair of the White House Council of Economic Advisers. His choice of Jared Bernstein and Heather Boushey for his CEA team pleases liberals. His pick of Brian Deese for top economic adviser pleases Wall Street. Mr. Deese is global head of sustainable investing at asset manager BlackRock.

Is debt a worry or not?

The president-elect鈥檚 grand plans may be helped by an evolution in economic thinking. Where a dozen years ago, in the teeth of the Great Recession, stimulus plans were constrained by broad concerns that deficits would get too high, many economists appear less concerned today, even though the federal debt has soared since then. One reason is that the high inflation that was supposed to rage after rising government borrowing a decade ago never happened. Interest rates declined, instead, for reasons economists admit they don鈥檛聽fully聽understand.聽

鈥淎 period of extraordinarily low interest that can be locked in for 10 to 30 years provides an unprecedented opportunity to address profound and longstanding investment deficits,鈥� Lawrence Summers, former Treasury secretary under President Bill Clinton, said at a recent online event at the left-leaning Brookings Institution. 鈥淔ailing to take advantage of that opportunity is putting our children at risk and is putting our long term fiscal position at risk by weakening our potential for inclusive growth.鈥澛�

But in the long run, the federal debt numbers are scary, many economists say. In 2009, just as the Obama administration got underway, federal debt聽totaled聽less than half of聽one year鈥檚 economic output. Now, at about 100% of gross domestic product,聽the debt load has effectively doubled.聽That鈥檚 one reason many Republicans are urging restraint on the stimulus in the short term and are skeptical of Mr. Biden鈥檚 plans for the long term.聽

鈥淭he big plans aren鈥檛 going to happen, but I do think that there might be some areas of cooperation,鈥� says Mr. Bixby of the nonpartisan Concord Coalition.聽

One of the biggest areas of common ground is infrastructure investment. Senators and representatives on both sides of the aisle want to fix roads and bridges. By taking an expanded view of infrastructure, the Biden administration might convince Congress to bolster the public health system, improve broadband access for underserved areas, and diversify the electrical grid with added solar and wind power, say analysts on both sides of the aisle.

Other economic priorities, such as raising taxes on corporations and individuals making more than $400,000 a year, look far less likely to get through Congress.聽

鈥淚t will be difficult to pass many of the programs that the more progressive wing of the Democratic Party would like,鈥� Michael Strain, director of economic policy studies at the right-leaning American Enterprise Institute in Washington, said at Brookings鈥� online event. 鈥淏ut I would expect that by the time we are talking about the 2024 election, we鈥檒l look back and see one or two significant legislative accomplishments.鈥�