With President-elect Joe Biden preparing to take the oath of office and become the fifteenth Vice President-turned-President in United States history, investors are waiting anxiously to see if he can get his term started off on the right foot during his first 100 days in office.
The first 100 days became a key benchmark for assessing a newly elected President’s success back in 1933 when President Franklin D. Roosevelt took office and began his fight to pull the U.S. out of the Great Depression. During his first century of days, FDR passed 15 major pieces of legislation and set a high standard for presidents to come.
Fast forward 88 years and Joe Biden is starting his 100 days off in what could be the most difficult economic circumstances since FDR took office. Crucial to Biden’s success will be how he handles a pandemic which has killed more than 400,000 Americans so far.
Among other things, Biden’s agenda for his first 100 days includes passing the $1.9 trillion economic stimulus package that he laid out Thursday and walking back tax-cuts for corporations and individuals earning over $400,000 a year.
Economic Support
The likely first move by Biden - that isn’t rejoining one of the numerous global organizations or compacts left by the Trump Administration - is certainly the economic stimulus package that he announced last Thursday. The $1.9 trillion economic relief package is, in a word, extensive, and is already being met with opposition from Republicans.
One of the controversial provisions in Biden’s stimulus plan is the proposed extension supplemental unemployment benefits. Currently, a $400 boost to those benefits is set to expire in March, but Biden's plan will extent them through the end of September. During negotiations in December, then Senate Majority Leader Mitch McConnell backed a plan that did not include the weekly benefits, likely signaling that he would oppose an extension this time around.
Another bump in the road is the plan’s calls for beefed up stimulus payments of $1,400 following $600 checks included in the last stimulus bill. Many Democrats and President Trump agreed on the $2,000 figure, but many Republicans oppose the additional spending. Despite the slim majority in the Senate, the boosted checks aren’t supported by every Democrat and will likely require some bipartisan support.
If the proposals mentioned above are bumps in the road, then increasing the minimum wage to $15 is boulder that Indiana Jones might have trouble dealing with. The minimum wage has not been increased since 2009 and has not kept pace with inflation nor productivity gains since 1968. If it had, a minimum wage salary would yield $48,000 annually at $24 per hour. Despite this, Republican lawmakers strongly oppose increasing the minimum wage on grounds that there will be fewer minimum wage jobs available and higher priced goods that could negatively eat away at the existing middle class’s income.
Taxes
Also on the agenda for Biden’s first 100 days is a new tax plan that will certainly not be favored by Republicans, despite containing “Made in America” subsidies as well as several other issues that could garner bipartisan support.
Biden’s tax plan would increase taxes on corporations to 28% from 21% (undoing the Trump corporate tax cuts). This, along with any increases to taxes really, is opposed by Republicans on the grounds that lower corporate taxes create jobs and increases wages, while encouraging companies to do business in the U.S…
In practice, however, money not paid in taxes is usually not money that automatically gets reinvested in ways that benefit the U.S. economy. Companies that have international operations tend to invest extra money back into expanding their presence in foreign markets, likely because those markets stand to provide higher growth opportunities than are available in the more saturated U.S. market. Additionally, companies that do spend their tax break dollars domestically tend to actually spend that money on furthering automation projects. This means that in most instances, money saved from taxes lowers U.S. employment rather than grows it.
