Now Biden Will Have To Match Trump’s Record On Inequality

Bouncing back from a recession, the U.S. economy will grow 6.6% in 2021, Goldman Sachs projects. After that things get tougher for President Joe Biden, and he will be hard pressed to match President Donald Trump’s record on inequality.

Work from home and enhanced digital platforms are forcing airline employees, waiters, retail clerks and other low-wage workers into job markets that pay less, require relocation or offer too few employment opportunities. Office buildings, storefronts, aircraft and other assets must be scrapped or repurposed at significant cost.

Biden’s reorientation of the U.S. economy—slowing oil and gas well and pipeline development and raising the social cost of carbon used to set environmental regulations—will leave still more workers and assets stranded.

person in brown pants standing near blue and white big big big rock signage

Image Source: Unsplash

Stimulus won’t cut it

Tax cuts and stimulus payments can’t rescue most of those people and businesses, and the Federal Reserve has run the string on easy-money policies.

Municipalities and businessesoften with questionable credit ratings, are feasting on cheap debt to survive pandemic shutdowns but many lack credible plans to right their finances afterward.

Last year, Tesla sold nearly 500,000 electric vehicles, whereas Ford’s F, bonds have been downgraded to junk status.

If the Fed raises interest rates as unemployment falls, it would instigate business failures that push high-tax local governments into budget crises that instigate self-defeating cycles of even higher taxes, business and middle-class flight, more empty offices and store fronts and decaying transit systems and schools.

If the Fed continues to enable foreign borrowing to finance companies and cities at rock-bottom rates, profligate borrowing will erode the dollar’s status as the global reserve currency. America could become vulnerable to a debt crisis as multinationals and foreign central banks slow purchases of dollar-denominated securities.

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Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. He is the five time winner of the MarketWatch best forecaster ...

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