The U.S. economy: What now?


(The writer is an economics professor at Michigan State University and director of MSU’s quarterly State of the State Survey, which measures Michigan’s consumer confidence and approval ratings of political leaders.)

Just like Barack Obama 12 years ago, Joe Biden takes office at a time when the United States economy is a mess. Last month, the economy provided 10 million fewer jobs than in February 2020. The job losses have been worse for women than for men, worse for minorities than for whites, and worse for low-income households.

On the eve of President Biden’s inauguration, the number of Americans who die every day from COVID is nearly twice as large as the number who died in the Japanese attack on Pearl Harbor in 1941. We are in a war with COVID, and we are not winning it. Moreover, the economy will not come close to a full recovery until we control the pandemic much better than we are now. Thus, President Biden’s number-one economic priority must be to get COVID under control.

I will get to Biden’s policy proposals shortly. But one of the most important challenges he faces is not one that can be fixed by passing a law. If we are to do our best in the war on COVID, President Biden will need to push a reluctant public to do much better than we are doing now, in terms of wearing masks, engaging in social distancing and avoiding large indoor gatherings.

In this regard, President Biden’s task is more difficult because of his predecessor, whose actions regarding COVID have been the very antithesis of leadership. Donald Trump has promoted remedies that are either ineffective or downright dangerous. He has hosted super-spreader events at the White House. He has attacked his own public-health officials when they have said things that he finds politically inconvenient.

Thus, Biden must fundamentally reset the national tone by setting a good personal example, respecting science and putting his country before himself. I believe his actions and words since the election are a good start. 

I am also deeply encouraged by Biden’s policy proposals announced last week. Biden has called on Congress to appropriate an additional $70 billion for vaccinations and testing. Whereas Trump never threw the whole weight of the federal government into the effort, I believe Biden will. He has pledged to invoke the Defense Production Act, to boost our supplies of personal protective equipment, syringes and much more.

The vaccination campaign is being managed by the states at a time when state and local resources are stretched to the breaking point. Here again, Biden’s proposals are encouraging. He calls for $350 billion in emergency funding for state, local and tribal governments. In 2020, congressional Republicans balked at aid to states and localities, spinning a false narrative about profligate spending in blue states. I call on Congress to step up this time, for the sake of all 50 states.

Although much of the work must be done at the state and local level, the first phase of the vaccine rollout has been far too fragmented. I expect President Biden to make good on his pledge of a coordinated national strategy. Federal resources can help coordinate, streamline and support the state and local campaigns.

It will be at least several months before we get the virus under control. In the meantime, millions of Americans are in desperate financial straits. President Biden’s proposal calls for increasing the amount of unemployment benefits and extending them through September.  Congress should pass this right away.

Biden also calls for an additional round of stimulus checks.  Important, his proposal would extend eligibility to millions of Americans with disabilities, who were excluded from earlier rounds. I hope that the next round of checks will be limited to those in the bottom half of the income distribution.

Even if the war on COVID goes as well as possible, it will be late 2021 or early 2022 before the U.S. economy looks “normal.” However, even before the economy stabilizes, President Biden should be laying the groundwork for dealing with longer-term problems:

In the best of times, most American children do not get the quality education they deserve.  This year, they have received even less. President Biden should lead America toward an education system that prepares every child for success.

America’s infrastructure needs are profound. These include our decaying roads, bridges, sewers, water systems, and electricity grid.  hey also include the energy and transportation infrastructure that are needed to combat climate change. President Biden should take the lead in addressing these needs.

Income inequality and wealth inequality in America have risen dramatically in recent decades.  The pandemic has made the disparities even worse. President Biden should embark America on a campaign to reduce poverty and inequality, by reversing the failed economic policies of the last 40 years.

Only Abraham Lincoln in 1861 and Franklin Roosevelt in 1933 have assumed the presidency at times of deeper national crises than those facing Joe Biden. Let us all pray that he, and we, are up to the challenge.


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