Joe Biden's agenda

Topics Joe Biden | USA | US economy

In his first speech to a joint session of the United States Congress this week, President Joseph R Biden said that “one hundred days ago, America’s house was on fire”, but now it was “ready for take-off” as it emerged from the pandemic. He used the speech to also drum up support for an enormous tax-and-spend package. Shortly after he took office, Mr Biden pushed a fiscal stimulus plan worth $1.9 trillion. Now he wants another $2.3 trillion for infrastructure spending, and $1.8 trillion to further expand the US’ social welfare schemes. This will be paid for by higher taxes on both private sector companies and on the wealthiest Americans.

Mr Biden’s approval rating in the US is solid, and this is not surprising, given the country is edging its way out of the pandemic. Mr Biden has also been noticeably active, with his administration recording more presidential actions in its first 100 days than any other president since Franklin Delano Roosevelt took office in 1933 and whirled into action to fight the Great Depression. Mr Biden has pushed up spending by almost 15 per cent of gross domestic product in his three months plus in office, and vaccines have begun to roll out to all American adults. His ambitious spending plans have failed to find favour with his Republican opponents, but the administration seems prepared to push them through anyway. In foreign policy, Mr Biden may have continued the hawkish tone towards China, which began in his predecessor’s administration, but has also insisted that US action against China and Russia will not be unilateral, expressing a comfort with rhetoric about multilateralism and global institutions that was lacking under Donald Trump. There is no doubt that the first 100 days have demonstrated the virtues of a steady hand at the tiller, particularly during the sort of crisis that the pandemic has caused.

Yet, from the point of view of India, Mr Biden’s administration will still give rise to concern. The recent flutter over US government controls on materials that Indian manufacturers need to produce vaccines and medicines, which was only resolved after considerable public and private pressure was applied, reveals that Mr Biden has not abandoned Mr Trump’s “America First” policy. The prioritisation of the American economy over the global fight against the pandemic will rankle. Further, in all the reversals of his predecessor’s actions that the new president announced, matters dealing with global trade integration were noticeably absent. Mr Biden may have led the US back into the Paris Accord, but not into the Trans Pacific Partnership. Even on climate change, although Mr Biden hosted a giant leader’s meeting to announce new targets for the US, there was no real attempt to introduce carbon taxes or other mechanisms essential to control the US’ demand for fossil fuels.

In the extraordinary spending plans that Mr Biden has announced, little thought seems to have been set aside not just for what it might imply for the future stability of the American economy, but also whether it will severely distort and warp global markets for capital and its effect on emerging economies like India. The new president in the US is clearly more radical than expected, and a stable superpower is good news. But the world will be disappointed if it assumes that Mr Biden will necessarily return the US to the days before “America First”.



Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel