The Biden administration is experiencing a wave of mounting optimism about COVID-19’s recovery from the recession, with the president and top surrogates heading out to sell their contingency plan.
Economists say the US is poised for a speedy recovery, thanks in part to the $ 1.9 trillion emergency relief bill signed on Thursday, which sends out another round of stimulus controls, extends comprehensive unemployment benefits and approves hundreds of billions of dollars to support local governments, small businesses and hard-hit industries.
The White House hopes to steer the momentum from the back passage of the bill President Biden
Joe BidenPentagon takes charge of extending Guard’s time at Capitol Booker to try to make child tax credit expansion permanent Sullivan says tariffs won’t be at the center of talks with China MOREOther initiatives, such as a faster vaccination campaign, a package to rebuild the country’s infrastructure, and additional measures that the government and some economists consider essential for improving the long-term trajectory of the economy.
“After long, dark years – a whole year – there is light and hope for better days as we all do our part,” Biden said in a speech to the nation Thursday evening. ‘This country will soon be vaccinated. Our economy will be recovering, our children will go back to school. “
“More than a year ago, no one could have imagined what we would be going through. But now we’re getting through it. “
Analysts predict gross domestic product (GDP) growth of 5 to 7 percent in 2021, after a 3.5 percent decline in 2020. The 6.2 percent unemployment rate, which is already much lower than the crisis peak of 14, 7 percent, can fall below 4.1 percent. according to Goldman Sachs by the end of the year.
The new injection of aid also comes amid signs of an accelerating economic recovery. The US added a whopping 379,000 jobs in February, consumer and corporate sentiment is soaring, unemployment claims fell short of expectations this week and inflation was well below the Federal Reserve’s 2 percent target range.
The US still has quite a climb ahead. About 9.5 million jobs lost to COVID-19 have not yet been replaced, millions of households still grapple with food and housing insecurity, and large parts of the U.S. workforce will have to find new careers as entire industries get from scratch trying to rebuild.
Still, many economists are convinced that Biden’s bill jump-started the process, with vital lifelines to sink families, help for states to fund essential services, and enough support to outlast the direct payments to Americans who will be shipped from this weekend.
“The White House and Democrats on the Hill have done an excellent job of ensuring that the combination of immediate aid and complementary aid … will be combined with abundant savings for households to strengthen the economy for at least the next three years,” said Joe Brusuelas, chief economist at RSM’s audit and tax firm.
Biden would like to show how he delivered on his campaign promise to implement a major contingency plan, which polls have found to be supported by about 75 percent of Americans. Biden heads to major swing states to sell the package, which Congress passed without a single GOP vote.
The president will travel to Pennsylvania on Tuesday and hold an event in Atlanta with Vice President Harris on Friday. First Lady Jill Biden
Jill Biden Overnight Healthcare: White House plans PR blitz to sell coronavirus bill | US Passes 100 Million COVID-19 Vaccine Shots | ObamaCare Expansion Will Be Available April 1 White House plans PR blitz to sell coronavirus emergency The Hill’s 12:30 Report – Presented by Johns Hopkins University – Biden sets optimistic tone for summer MORE will also hold an event in Concord, NH, where Sen. Maggie Hassan
Margaret (Maggie) HassanSenate Approves Major Coronavirus Measure In Partisan Vote Senate Rejects Cruz Effort To Block Stimulus Controls For Undocumented Immigrants The Eight Democrats Who Voted ‘No’ On Minimum Wage MORE (D) is expected to face a tough reelection campaign in 2022.
However, Republicans say the massive debt hike, the potential for inflation and higher taxes will once again haunt Biden – especially as he tries to approve a massive infrastructure bill.
“There is no country that sees this debt growth and does not end with high interest rates and inflation,” Senator Rick Scott (R-Fla.), A potential candidate for the GOP nomination for 2024, told The Hill.
“If you look at history, if you end up with an administration aimed at increasing taxes, you don’t end up with a growing economy. The only way out of this is to choose someone who knows how to grow the economy, ”he said, pushing aside predictions that the economy could grow in nearly 40 years by 2021.
While both deficits and debt soared under the previous one President Trump
Donald Trump Pentagon Takes Heat For Extending Guard’s Time As Capitol Fundraising Spits At Trump-GOP Rifts Trump Rally Organizer Claims Alex Jones Threatened To Throw Her Off Stage: MORE ReportIncluding $ 1.9 trillion in tax cuts and significant increases in domestic spending, Republicans protested Biden’s $ 1.9 trillion bailout, saying it was poorly targeted and far too large.
They got some support from Larry Summers, who served as Secretary of the Treasury under President Clinton and argued that the huge bill could overheat the economy.
With freshly-lined pockets, consumers would rush to seek out goods and services from businesses short of capacity, leading to price hikes and any interest rate hikes, which could drain the economy.
In the past, entrenched expectations that prices would continue to rise have kept financing costs high for homeowners, car owners and businesses.
Inflation concerns pushed bond yields to their highest point in a year on Friday.
But many experts, including Federal Reserve Chairman Jerome Powell, have maintained that those fears are exaggerated.
“The economy is a long way from our employment and inflation targets, and it will likely be some time before substantial further progress is made,” Powell told the Senate Banking Committee last month.
He added that two decades of low inflation and a weaker relationship between government debt, low unemployment and price increases, the risks of overheating are now low.
February’s inflation rate came in at just 0.4 percent, and the March consumer survey found people expect only a temporary price hike.
Lindsey M. Piegza, chief economist at Stifel, says a little inflation won’t be the end of the world.
“With an average inflation rate of 1.3 percent over the past five years, there is a chance that inflation will be close to 3 percent over the next five years without exceeding the longer-term average of 2 percent,” she said .
However, Scott says Powell’s assessment misses the mark.
‘He doesn’t look at history. He’s clearly not looking at what happened in the past, ”he said.
The guilt can still haunt Biden.
Even before the COVID-19 bill was signed, debt levels were already on track to surpass their World War II peak by the end of the decade. The cost of paying off the debt alone is about $ 300 billion a year, about 9 percent of annual revenues.
“In the future we will have to pay for new priorities with new income and budget savings. And eventually, once the economy has recovered, we will have to reduce our deficits to a more sustainable level, ”said Maya MacGuineas, chairman of the Committee on a Responsible Federal Budget.
That could lessen the hunger for deficit-funded infrastructure of both centrist Democrats and Republicans.
“They’ve already used up the credit card. It will make it very difficult for them to spend money on things we care about, ”Scott claimed, adding that taxpayers don’t want higher taxes.
Biden is still expected to push ahead with an infrastructure law this year, and economists across the ideological spectrum have long viewed those upgrades as essential to accelerating the economy in the coming years.
Brusuelas said that without a significant infrastructure package, the US growth rate could fall back to the long-term trend of 1.8 percent per year.
“That’s something I wouldn’t think is acceptable to most Americans,” he said. “The stakes here are so high that we take advantage of what are going to be some good years of growth, but go ahead and leave a legacy.”