ST. CROIX, US Virgin Islands – The President Joe Biden briefly interrupted his vacation on the island last week to sign a $1.7 trillion spending bill, capping off a two-year legislative push that could reshape the US 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 probability of legislative deadlock in a newly divided federal government, now that Republicans have assumed control of the House of Representatives.
A vital test Biden faces is making all 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 at various agencies, officials are trying to stretch dollars to meet Biden’s ambitious goals, including putting Internet of high speed available to the entire country, replace all lead pipes that carry drinking water, and build a national network of electric vehicle charging stations.
In those cases and many others, officials are working with much less money than the president had initially proposed, a side effect of the appointments which he agreed to gain bipartisan support to enact his agenda.
Already, federal officials are sometimes at odds with state and local leaders, who control some of the spending for a wide infrastructure law and what’s left of a huge pandemic bailout plan, and who don’t always share the administration’s priorities.
“We will have discussions: 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 New Orleans mayor appointed by Biden to oversee infrastructure law enforcement.
“We have to fight for those things. That’s all very well, but we’re on the right track, and I feel very good about it.”
“This is going to be a hands-on, elbowing thing today,” Landrieu added, “and for the next three, five, seven years.”
Biden must also sell his achievements to voters before what he says will be an announcement earlier in the year that he will run for re-election in 2024.
The president plans to begin this week with an event in Kentucky in which he will try to show that he is the the only one capable of overcoming divisions partisans to strengthen the American economy.
“Although we have more work to do, and we 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 from the center out is working.”
Prospects
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 throughout the week, a mood echoed by Biden in the few brief public appearances he made in Santa Cruz.
“Good year next,” he told reporters after leaving the church on New Year’s Day.
“I’m looking forward to it.”
He raised his thumb.
Biden has stressed the positive aspects of economic recovery since taking office, less than a year after the rapidly declining pandemic recession.
He has highlighted strong job growth, especially in the manufacturing sector, and has called the United States better positioned than its peers to withstand any headwinds in the coming years for the global economy.
Economic events have made that message difficult, particularly the rapid rise in consumer prices.
Inflation hit its highest level in 40 years last year under Biden.
It’s starting to improve, but it’s still well above historical norms.
Forecasts point to economic growth slowing significantly 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.
Those rate hikes, along with the continuing fallout from 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 recession.
In the event of a contraction in the United States, Biden will most likely find that Congress is unwilling to spend money trying to revive growth.
“For most of the world economy, this is going to be a tough year, tougher than the year we left behind,” he said 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 resilience is a direct consequence of the series of bills he led through Congress in his first two years, which delivered much of the economic agenda he set out in the 2020 campaign and early in his term. mandate.
These laws include the $1.9 trillion pandemic rescue package passed by the parties in the spring of 2021, and the bipartisan infrastructure law of the 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 Inflation Reductionapproved by the parties after more than a year of negotiations with the centrist Democrats in the Senate.
This law increases corporate taxes and cracks down on the wealthy who cheat the taxpayer, aims to lower the cost of prescription drugs for seniors with Medicare, and allocates $370 billion to accelerate the transition to low-emissions energy sources, the most expensive effort in US history to fight climate change.
Economists claim that the rescue plan accelerated the country’s economic recovery and job growth, and helped strengthen consumer finances.
It also helped fuel inflation, though economists disagree on how much.
The focus on ports has helped unclog global supply chains that were clogged when 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 soared after Russia’s invasion of Ukraine.
The Deese and Dunn note notes that the Administration has announced $185 billion in new infrastructure projects and that companies have announced $200 billion in new manufacturing investment linked to the semiconductor law.
They estimate that the entire package of new laws will boost $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 US 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 selecting infrastructure projects to finance, such as road and bridge repairs.
The Treasury and Commerce departments are beefing up their workforces to meet crucial provisions of the weather and manufacturing laws.
Other White House officials are outspoken about the challenges posed by the long-term initiatives such as abandoning fossil fuels.
“This transition that we have to make to clean energy is complicated and it will take time,” Heather Boushey, a member of Biden’s Council of Economic Advisers, said in an interview last year.
“And it requires changing some of the biggest and most expensive things that 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 the application of the laws.
On Wednesday, he will fly to the Cincinnati area to celebrate the infrastructure bill’s investment in renovating an outdated 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, one Democrat and one 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 control, the president can make more deals to push through other parts of his program that he failed to get through in his first two years, such as furloughs. paid for all workers, universal preschool education and free public universities.
Most experts believe that it will not. House Republicans have made it clear they want to cut spending and oppose tax increases.
Biden has seen what the loss of 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 his legislative agenda wither after Democrats lost their majority in the House of Representatives in the 2010 midterm elections.
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