IASbhai Daily Editorial Hunt | 12th Nov 2020
“Just know, when you truly want success, you’ll never give up on it. No matter how bad the situation may get.” – Unknown
EDITORIAL HUNT #237 :“Biden’s Economic Revival Plan ”
Biden’s Economic Revival Plan
Sukumar Muralidharan teaches at the school of journalism, O.P. Jindal Global University, Sonipat
Trumpism still remains unvanquished
The U.S. President-elect has vowed to rebuild the middle class, but will have a hard time finding the middle ground
SYLLABUS COVERED: GS 2 : 3 : IR : Economy
Critically examine the America First Policy and the recession due to ongoing Pandemic. -(GS 2,3)
- Inequality and the Middle Class
- Tax code changes by Trumps Administration
- Redistribution and Polity
- Obama’s comeback
- Way Forward
- REBUILD THE MIDDLE CLASS : In his first speech after elections, Joseph R. Biden promised to rebuild the middle class as the “backbone of the nation”.
- RESTORING EQUITY : Restoring a semblance of equity will be harder, when the system has drifted far from that ideal and the drivers of inequality are deeply rooted.
- ECONOMIC SLOWDOWN : Trump’s administration saw, a bit of hyperbole rested on the thin foundation of the stock market.
- AMERICA FIRST POLICY : Other boasts, such as a massive stimulus to U.S. manufacturing output, refuse to die though long since proven hollow.
EFFECTS OF TAX CODE CHANGES
- TRUMP’S SIGNATURE POLICY : The Tax Cuts and Jobs Act of 2017, raised exemption limits on estate duty and reserved many other favours for high-income individuals and corporations.
- MIDDLE CLASS CONCESSIONS : The few concessions to the middle class and low-income earners, were largely neutralised by lower allowances and deductions.
- PRICE RISE : The tax cuts sparked a flurry of share buybacks by corporate beneficiaries, sending prices soaring.
- A CASE OF RECESSION : Today’s ratio of share prices to earnings stands near the levels touched between 2007 and 2008, just ahead of the abrupt collapse heralded by the global meltdown.
A REDISTRIBUTION AND POLITICS
- VOLCKER SHOCK : The 1980s began under the shadow of the “Volcker shock”, an overnight increase in interest rates that pushed the U.S. into recession.
- EQUILIBRIUM THEORY : High interest rates attracted large inflows of foreign capital, sustaining and causing the enormous U.S. external deficit in a process of cumulative causation quite unlike anything foreseen by “equilibrium theory”.
ONE BUBBLE TO ANOTHER
- BARACK OBAMA’S ADMINISTRATION : He brought conventional Keynesian remedies back, but the massive rescue package he shepherded was paid out to the bankers who brought on the crisis.
- EQUITABLE TAXATION : He did return to a marginally more equitable taxation regime, but his legacy finally was a more rapid growth of inequality, measured by the Gini coefficient, than during prior Republican tenures .
TRUMP AND TROUBLES
- GROWING DEBT : Both inequality and household debt have continued growing under Mr. Trump. Even before the novel coronavirus pandemic.
- FINANCIAL SERVICES : Credit card and automobile loan delinquencies were showing a troubling upward trend.
- ASSET PRICES : Increasing asset prices in the context are a source of solace for households struggling to get by.
- MIDDLE CLASS ANXIETY : This could be measured in direct proportion to the size of the gap between household assets and liabilities.
He may have lost, but the 71 million votes he garnered — the most for any candidate, winning or losing, other than the person he actually lost to — shows that Trumpism still remains unvanquished.