President-Elect Joe Biden and his incoming Administration are inheriting an economy decimated by COVID-19. Throughout the campaign and following Election Day, Biden and his closest advisors highlight controlling the coronavirus as their absolute top priority. As retailers, we have witnessed the health and economic impacts of COVID-19 from widespread closures from March – June 2020 and then periodic surges during the summer and now, around the holidays. Generally, the economy began recovering over the summer. However, nothing has been sustained as tens of millions of individuals still rely on unemployment benefits, and various industries close to ruin (airlines, restaurants, hotels/hospitality). The CARES Act prevented an economic fallout, the $2.2 Trillion bill which created the Paycheck Protection Program, expanded unemployment insurance benefits, and created other business aid programs at the Federal Reserve.
It is not a coincidence that Biden and his team of economic advisors lived through The Great Recession while in office and implemented the American Recovery and Reinvestment Act (ARRA). An early priority for the Economic Team will be working with Congress to craft another robust stimulus package to build on the CARES Act’s successes and stabilize and volatile health and economic situation. It will be a monumental task; party margins in the House and Senate are razor-thin. We are watching the January 5th Georgia Senate runoffs closely as those results will impact the prospects of significant legislation moving forward. If Democrats win those two runoffs and gain control of the Senate, it will change the dynamics moving forward.
Throughout the Presidential campaign, there were innuendos from the Biden team and Democrats about pursuing tax reform with the potential of raising the corporate tax rate, lowered to 21% in 2017 as part of the Tax Cuts and Jobs Act, to ‘pay for’ other priorities like infrastructure. That particular policy focus has fallen back given the elections’ outcome but could get more attention if Democrats win those Georgia runoffs.
Biden’s nominees thus far have several things in common:
- Close working relationship with Biden and his team
- Deep government experience, so they are ready on ‘Day 1’ to confront challenges
- The established track record on issues important to the Democrat Party like equity, diversity, and climate change
These traits are no more visible than with his Economic Team. These nominees may be the ‘responsible’ minds for economic recovery. Still, it will require an Administration-wide effort to control the virus through vaccine distribution (Health and Human Services), continuing to support small and medium-sized businesses struggling to survive (Small Business Administration), determining student loan payments (Department of Education), and managing unemployment insurance issues (Department of Labor), among others.
Janet Yellen – Secretary of Treasury Nominee
Yellen would make history as the first woman the lead the Treasury Department and the first person to Chair the Federal Reserve, Council of Economic Advisors, and serve as Treasury Secretary. Yellen was the Federal Reserve Chair during the recovery from the Great Recession, and that experience was a significant factor in her nomination. Given her wide-ranging expertise in some of the most consequential economic positions, markets and the business community reacted positively to her appointment.
Yellen has spoken about the critical need for additional unemployment benefits and federal capital support for businesses, key elements currently being negotiated in Congress for additional COVID-19 relief.
Cecilia Rouse – Chair, Council of Economic Advisors (CEA)
Ms. Rouse served as a member of the Obama-Biden Council of Economic Advisors (CEA) and is currently the Dean of the Princeton School of Public and International Affairs. In this role, she will be a key advisor on the impact policy changes would have on the economy moving forward. As such, she is tied closely to broader congressional stimulus discussions.
The other two announced members of the CEA are Jared Bernstein and Heather Boushey. Both have strong ties to Biden from his time as Vice President in the Obama Administration.
Brian Deese – Director of the National Economic Council (NEC)
Deese would replace Larry Kudlow, and the Director of the NEC is more of a ‘public-facing’ position, explaining economic trends and policy decisions to the American people. He will also serve as a coordinator for the broader economic team, including Treasury, CEA, and others. Deese held many positions in the Obama White House, including Deputy Director of the NEC, so he was another likely choice.
After leaving the Obama Administration, Deese oversaw BlackRock’s sustainable investments. That position, coupled with his experience advising on climate issues, will be another critical piece of the economic portfolio as the Biden Administration will apply greater focus to climate issues moving forward.
The Home Furnishings Association has been an aggressive advocate for additional COVID-19 relief for furniture retailers related to the extension of the Paycheck Protection Program (PPP) and business liability protections. These messages remain critical into 2021, and we will work with the incoming Administration to explain our industry’s economic impact on the broader recovery.