Biden's economic choices suggest focusing on workers and income equality

Nov 30, 2020 Travel News

Biden’s economic choices suggest focusing on workers and income equality

WASHINGTON – President-elect Joseph R. Biden Jr. officially announced his top economic advisers on Monday, choosing a team filled with champions of organized labor and marginalized workers, signaling an early focus on efforts to accelerate and disseminate the gains of recovery. of the pandemic recession.

The selections build on a pledge Mr Biden made to business groups two weeks ago, when he said unions would have “increased power” in his administration. They suggest that Mr. Biden’s team will initially focus on increasing federal spending to reduce unemployment and an expanded safety net to cushion households that have continued to suffer as the virus persists and the recovery slows.

A sign that Mr Biden plans to focus on spreading economic wealth, his transition team has brought equality and worker empowerment issues to the forefront in his press release announcing the nominees, saying they would help the incoming administration create “ an economy that gives every single person across America a fair and equal chance to move forward.

Mr. Biden’s picks include Janet L. Yellen, the former Federal Reserve Chairman, who, if confirmed, would be the first woman to serve as Secretary of the Treasury; Cecilia Rouse of Princeton University, the first black female candidate to head the White House Council of Economic Advisers; and Neera Tanden of the Center for American Progress think tank, who would be the first woman of color to lead the Office of Management and Budget. All three have focused on efforts to increase workers’ incomes and reduce racial and gender discrimination in the economy.

Ms Tanden said in February that decades of growing income inequality were the result of “decades of conservative attacks on the right of workers to organize” and that unions “are a powerful vehicle for bringing workers into the workplace. middle class and keep them there ”.

The two other candidates for Mr. Biden’s Council of Economic Advisers, Jared Bernstein and Heather Boushey, are economists who have long pushed for policies to advance workers and workers’ rights, and who have advised Mr. Biden in his campaign as he crafted a program that included several long-standing organized labor goals, such as raising the federal minimum wage and strengthening “Buy America” requirements in federal contracts.

William E. Spriggs, the AFL-CIO’s chief economist, praised the selections on Monday for their experience in political debates and their attention to issues of inequality. “We haven’t had an ACE so focused on the role of fiscal policy and full employment since President Johnson,” Spriggs said in an email.

The team’s adoption of deficit spending to stimulate the economy in the current crisis was highlighted in March in an opinion piece that Ms Tanden and Ms Boushey wrote with two co-authors, urging policymakers to spend a lot to help people, businesses, and state and local governments are enduring the recession.

“Given the scale of the crisis,” they wrote, “now is not the time for policymakers to worry about rising deficits and debt as they reflect on the measures. to take.”

Mr Biden also appointed Adewale Adeyemo, the Obama administration’s senior international economic adviser, as Assistant Secretary of the Treasury. Mr Adeyemo, who is known as Wally, is said to be the first black man to occupy the No. 2 role in the Treasury.

The nominees will be presented on Tuesday. This event will not include another of the choices of Mr Biden, former Obama adviser Brian Deese, who was hired to lead the National Economic Council but was not included in Monday’s announcement.

Mr Biden’s team includes several labor economists, including Ms Yellen, who is a longtime champion of workers and who has sometimes suggested managing the labor market at very low levels of unemployment – which some economists deemed unwise. – could be beneficial. While at the Fed, she balanced her preference for a strong job market with inflation concerns and political constraints.

In the early 2000s, Yellen was instrumental in convincing the Fed’s policy-making committee to unite around the goal of a 2% inflation rate instead of the inflation rate. none that Alan Greenspan, the then Fed chairman, originally favored. The Fed is raising rates to slow the economy and offset inflationary pressures, so targeting slightly higher inflation has opened the door to longer periods of cheap borrowing that lead to stronger economies and to a drop in unemployment.

As Fed chairman between 2014 and 2018, Ms Yellen fostered a patient approach to policymaking that balanced fears that prices might rise as unemployment fell versus a preference to attract more workers in the labor market.

In a shaky 2016 speech, she suggested that allowing the labor market to grow without raising interest rates could help reverse the damage in the labor market. She was criticized for these remarks, and later moved away from such an approach in word if not in deed. She and her colleagues raised interest rates to protect themselves from inflationary pressures, but did so at a very slow pace. She was often criticized at the time for being too slow.

Ms Yellen has also taken a cautious line when it comes to issues like inequality. In a 2014 speech, she suggested that widening income and wealth inequality might be incompatible with American values ​​- “among them, the high value Americans traditionally place on equal opportunity” – a remark criticized by Republicans.

“You put your nose in places where you have nothing to do,” said Mick Mulvaney, then Republican representative for South Carolina, of his speech at a hearing in 2015.

Much has changed since Ms Yellen was at the Fed – in a way that might allow her to embrace some of her more pro-work instincts if confirmed to Treasury. While the Secretary of the Treasury has somewhat limited direct economic power, the position wields significant influence as fiscal policy advisor to Congress and the President, as well as oversight of fiscal policy through the Internal. Revenue Service.

Inflation, once seen as a real and imminent threat, has been low for more than a decade. Inequalities, once characterized as a political and liberal issue, are increasingly recognized as a real economic constraint by Democrats and Republicans.

Still, some progressive groups have raised concerns that Mr Biden’s team could pivot too quickly to try to reduce the federal budget deficit once the pandemic subsides, citing earlier comments by Ms Yellen and Ms Tanden. .

Left-wing economists are increasingly comfortable with deficit spending, and Ms. Yellen has long favored government intervention as a means of reviving the economy in times of difficulty. But she also said that US debt was unsustainable and that she had generally favored taxation to offset the increase in spending.

Mr Biden also expressed support for borrowing money to help with the current recovery, but sought to offset the cost of other economic proposals – such as an infrastructure bill and measures to mitigate change. climate change – with tax increases on top incomes and businesses.

In a 2018 interview with the Charles Schwab Impact conference in Washington, Ms. Yellen said the US debt path was’ unsustainable ‘and offered a cure:’ If I had a magic wand, I would increase taxes and reduce retirement spending. Last year, she described the need to reform national social safety net programs as a “root canal economy”.

However, during the current crisis, Ms. Yellen has made it clear that she does not see deficit reduction as a priority and that the federal government should spend what is necessary to overcome the pandemic. In July, she testified before Congress with Ben S. Bernanke, another former Fed chairman, and called for substantial federal support.

“With interest rates extremely low and likely to remain so for some time to come, we don’t believe deficit and debt concerns should prevent Congress from responding vigorously to this emergency,” she said. . “The top priorities right now should be to protect our citizens from the pandemic and to pursue a stronger and more equitable economic recovery.”

The White House budget director is often at the center of tax battles with Congress, and some Liberals raised concerns about Ms Tanden’s remarks to C-SPAN in 2012 on potential cuts to net programs. security as part of a long-term deal to reduce federal debt.

In that interview with the network, Tanden said Social Security, Medicare and Medicaid restructuring needs to be “on the table” in conversations about long-term deficit reduction and noted that the Center for American Progress had made such proposals.

But in 2017, as Republicans prepared to approve a $ 1.5 trillion tax cut, Ms Tanden showed no desire to return to deficit reduction in a future administration. “The rule seems to be that deficits only count for Democratic presidents,” she said written on twitter. “And this rule must die now.” We shouldn’t have to clean up their mess.

“There is reason to be hopeful,” said Stephanie Kelton, a professor at Stony Brook University and author of “The Deficit Myth,” which argues that budget deficits are not inherently bad.

Ms Kelton helped set the economic agenda during the Biden campaign as a member of the task force, and said that the fact that people like Mr Bernstein and Ms Boushey are included among economic thinkers is a reason to hope that progressive ideals will have a voice at the table. That said, she said she remained suspicious that deficits and deficit reduction would continue to attract attention.