Biden’s new economic challenges after two years in government

ST. CROIX, US Virgin Islands – The President Joe Biden briefly interrupted his island vacation last week to sign a $1.7 trillion spending bill, capping a two-year legislative push that could reshape the U.S. economy and put Biden among the presidents with greater economic impact of the last century.

However, on his flight back to Washington on Monday, Biden faced challenges that could threaten that legacy, such as the possibility of a world recession and the high likelihood of legislative deadlock in a newly divided federal government now that Republicans have taken control of the House of Representatives.

A fundamental test facing Biden is making all of his new economic laws work. as planned.

Much of his economic legacy will depend on how effectively his administration allocates the trillions of dollars in spending and tax incentives contained in the economic laws that Biden enacted during his first two years in office.

Throughout the White House and various agencies, officials are trying to stretch dollars to meet Biden’s ambitious goals, including the put High speed internet available to the whole country, replace all the lead pipes that carry drinking water and build a national network of charging stations for electric vehicles.

In those cases and many others, officials are working with far less money than the president initially proposed, a side effect of the engagements that he agreed to enlist bipartisan support to implement his agenda.

Already, federal officials sometimes disagree with state and local leaders, who control some spending for a large infrastructure law and what’s left of a huge pandemic bailout, and who don’t always share the administration’s priorities.

“We will discuss: the governors will say:

“Well, I don’t want to fix a bridge. I want to build a new highway,'” said Mitch Landrieu, the former mayor of New Orleans appointed by Biden to oversee infrastructure law enforcement.

“We have to fight for these things. Everything is fine, but we are on the right track and I feel very good.”

“This will be a practical thing, elbowed today,” Landrieu added, “and for the next three, five, seven years.”

Biden must also sell his successes to voters before what he says will be an announcement earlier this year that he will run for re-election in 2024.

The president plans to kick off this week with an event in Kentucky where he will try to prove himself the only one able to overcome the divisions partisans to strengthen the American economy.

“Although we have more work to do and may see setbacks along the way,” Brian Deese, director of the National Economic Council, and Anita Dunn, a top Biden adviser, wrote in a note to reporters last week. “We ended the year with clear evidence that President Biden’s economic strategy of growing the economy from the bottom up and the core out is working.”

perspectives

Biden ended 2022 in high spirits, vacationing with his wife, Jill, daughter Ashley, and grandchildren Hunter and Natalie in the Virgin Islands.

His aides described him as in good spirits all week, a mood echoed by Biden in the few brief public appearances he has made in Santa Cruz.

“Happy new year next,” he told reporters after leaving church on New Year’s Day.

“I look forward.”

He raised his thumb.

Biden has highlighted the positives of the economic recovery since he took office, less than a year after the rapidly ebbing pandemic recession.

He highlighted strong job growth, especially in the manufacturing sector, and called the United States better positioned than its peers to weather any headwinds in the coming years for the world economy.

Economic events have made this message difficult, especially the rapid rise in consumer prices.

Inflation hit its highest level in 40 years last year under Biden.

It’s starting to improve, but is still well above historic norms.

Forecasts point to a significant slowdown in economic growth this year as the Federal Reserve continues to aggressively raise interest rates, along with other central banks around the world, in an effort to curb price growth.

These rate hikes, coupled with the continuing aftermath of the war in Ukraine, threaten a recession that could consume the United States.

Several major economies, such as England and parts of continental Europe have already entered a recession.

In the event of a contraction in the United States, Biden will most likely find that Congress is not willing to spend money to try to revive growth.

“For most of the world economy, this is going to be a tough year, tougher than the year we’ve left behind,” he said on Sunday. Kristalina Georgievamanaging director of the International Monetary Fund, on CBS News’ “Face the Nation.”

But he added, “America is the most resilient country. America can avoid recession.”

Biden’s economic team argues that the resilience is a direct consequence of the series of bills he drove through Congress in his first two years, which delivered much of the economic agenda he set in the 2020 campaign and early of his mandate.

These laws include the $1.9 trillion pandemic rescue package passed by the parties in spring 2021 and the bipartisan infrastructure bill that same year.

Last summer, Biden signed a bipartisan bill to invest in semiconductor manufacturing, research and development, and other elements of an industrial policy to counter China on the world stage.

Later he signed the so-called Law of Reduction of inflationapproved by the parties after more than a year of negotiations with centrist Democrats in the Senate.

This law raises corporate taxes and cracks down on the rich who cheat taxpayers, aims to reduce the cost of prescription drugs for seniors with Medicare, and allocates $370 billion to accelerate the transition to low-carbon energy sources, the largest effort expensive in the United States history to fight climate change.

Economists argue that the rescue plan it accelerated the country’s economic recovery and job growth and helped strengthen consumer finances.

It has also helped fuel inflation, though economists disagree on how much.

The focus on ports has helped unblock global supply chains that were clogged as the economy reopened after the pandemic.

Biden’s decision to release millions of barrels of oil from the Strategic Petroleum Reserve went some way to lowering gasoline prices, which have soared since the Russian invasion of Ukraine.

The Deese and Dunn memo notes that the administration has announced $185 billion in new infrastructure projects and that companies have announced $200 billion in new manufacturing investments related to the semiconductor law.

They estimate that the entire package of new laws will raise $3.5 trillion in public and private investment over the next decade.

But much work remains to be done to implement Biden’s legislation and his vision of the American economy.

Administration officials have accelerated that work in recent months, drafting new regulations to regulate the tax incentives, such as those for electric and fuel cell cars, and the selection of infrastructure projects to finance, such as road and bridge repairs.

The Treasury and Commerce departments are strengthening their workforces to meet crucial provisions of weather and manufacturing laws.

Other White House officials speak candidly about the challenges posed by long-term initiatives, such as moving away from fossil fuels.

“This transition we need to make to clean energy is complicated and will take time,” Heather Boushey, a member of Biden’s Council of Economic Advisors, said in an interview last year.

“And it requires changing some of the biggest and most expensive things people buy: a furnace, a car, how they cool their house, what kind of transportation they drive.”

Biden will not hesitate to celebrate progress in law enforcement.

It will fly to the Cincinnati area Wednesday to celebrate the infrastructure bill’s investment in the renovation of an aging bridge between Kentucky and Ohio that has become a choke point for regional and national commerce.

He is expected to preach cross-party cooperation to solve big problems, appearing alongside the governors of both states, a Democrat and a Republican, as well as Senator Mitch McConnell of Kentucky, the leading Republican.

Some White House officials remain hopeful that even with the House under Republican scrutiny, the president can make more deals to pass other parts of his agenda that he failed to complete in his first two years, such as paid time off for all workers, universal pre-school education and free public universities.

Most experts believe it won’t. House Republicans have made clear they want to cut spending and oppose tax hikes.

Biden saw what losing the House can do to a president’s economic ambitions:

It happened when he was vice president of the Obama administration, which saw much of its legislative agenda vanish after Democrats lost their majority in the House of Representatives in the 2010 midterm elections.

c.2023 The New York Times Society