With Covid-19 cases spiking, the world’s largest economy faces an uncertain outlook that Biden and his economic team led by Treasury secretary nominee Janet Yellen will have to work to remedy.
The diverse group, with women and minorities in key roles, is set to inherit the fallout from millions in jobs losses along with an ongoing wave of corporations laying off workers and small businesses shutting their doors altogether.
Congress has been deadlocked for months on approving another spending bill to aid the economic recovery, but outgoing Treasury secretary Steven Mnuchin on Tuesday reiterated his support for forging a compromise.
“I will continue to work with Congress,” Mnuchin said. “I urge Congress to pass something quickly.”
The goal is to enact a successor to the $2.2 trillion CARES Act after its main provisions expired earlier this year, but Democrats want another massive spending bill while Mnuchin and his fellow Republicans prefer a smaller measure.
A $908 billion proposal unveiled by a bipartisan group of lawmakers represents a compromise with a much smaller price tag than previous plans, and includes extended unemployment benefits, loans for small businesses and help for struggling state and local governments.
“It’s inexcusable for us to leave town without an agreement,” Democratic Senator Joe Manchin told a press conference. “It’s not the time for political brinksmanship.”
Republican Senator Susan Collins called the emergency relief “essential” amid a renewed nationwide surge in coronavirus cases.
But without support from Republican Senate leader Mitch McConnell, the bill will face a tough fight for approval in the final weeks of Donald Trump’s presidency.
– Mirror images –
Mnuchin said he spoke to McConnell earlier Tuesday and will speak later with Democratic House Speaker Nancy Pelosi regarding a budget deal to avert a government shutdown on December 11, though they also will discuss a possible stimulus plan.
In a joint appearance Tuesday before the Senate Banking Committee, Mnuchin and Federal Reserve Chair Jerome Powell offered mirror images of the state of the US economy, with the Treasury secretary hailing the recovery while the central bank chief warned of continued uncertainty.
“The rise in new COVID-19 cases, both here and abroad, is concerning and could prove challenging for the next few months,” Powell said, warning that “a full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”
He said more aid is needed and in an apparent response to deficit hawks, stressed that the “risk of overdoing it” is far outweighed by the risk of not doing enough to help the economy.
“Additional fiscal relief would really help to guard against” a worse downturn, Powell said.
Mnuchin drew criticism for his decision last week to pull back $455 billion in unused funds from the Fed that were meant to support lending programs for businesses and local governments, refusing to extend them beyond the end of the year.
Democrats accused him of trying to sabotage Biden’s administration on his way out the door, though Mnuchin also allowed a three-month extension for four programs that deal with corporate debt.
– Biden’s team –
Yellen, who made history as the first woman to lead the Fed and would do so again if confirmed as the first female Treasury secretary, is well-regarded for navigating the central bank through the aftermath of the global financial crisis.
Other nominees for Biden’s economic team include Nigerian-born Wally Adeyemo, the first African American in the role of deputy Treasury secretary.
Neera Tanden, president of liberal think tank Center for American Progress, was picked to head the Office of Management and Budget. If confirmed, she would be its first South Asian leader, but is a controversial choice who faces oppositions from conservatives and progressives.
Cecilia Rouse, the dean of the Princeton School of Public and International Affairs, was tapped to chair Biden’s Council of Economic Advisors and would be the first African American in that post.