Biden’s economic team is proposing to focus on workers and income equality

WASHINGTON – President-elect Joseph R. Biden Jr. officially announced his senior economic advisers on Monday and selected a team of organized labor champions and marginalized workers, signaling an early focus on efforts to accelerate and spread the benefits of the recovery. from a pandemic recession.

The election is based on a promise Mr Biden made to business groups two weeks ago when he said unions would have “increased power” in their administration. It is suggested that Mr. Biden’s team initially focus on increased federal spending to reduce unemployment and an expanded safety net for padding households that continue to suffer from the presence of the coronavirus and a slowdown in recovery.

As a sign that Mr. Biden wants to focus on spreading economic wealth, his transition team highlighted the issue of equality and equal opportunities for workers in his press release announcing the candidates, saying they will help create an “economy that passes the world to every single person. America has a fair shot and an equal chance of advancing.

Mr. Biden’s choices include Janet L. Yellen, former chairman of the Federal Reserve as finance minister; Cecilia Rouse, head of the White House Economic Advisory Council at Princeton University; and Neera Tanden, think tank of the Center for American Progress, head of the Office of Administration and Budget. All three focused on efforts to increase workers ’incomes and reduce racial and gender discrimination.

Ms Tanden said in February that growing income inequality was “the result of decades of conservative attacks on workers’ right to organize ”and that unions were“ a huge tool for relocating and retaining workers in the middle class ”.

Two other candidates for Biden’s Council of Economic Advisers, economists Jared Bernstein and Heather Boushey, who advocate for policies to promote workers and labor rights, gave advice to Mr. Biden in his campaign when he set up an agenda that was featured several times. the long-standing goals of organized labor, such as raising the federal minimum wage and strengthening “Buy America” requirements in federal contracts.

Ms. Boushey was also a vocal advocate for policies to help working families, including 12 weeks of paid family and medical leave. In an interview last week, Ms Boushey said such a policy is particularly critical in a pandemic, “when life is at stake.”

William E. Spriggs, chief economist at the AFL-CIO union, welcomed the election, saying in an email on Monday that “we haven’t had such a focus on the role of fiscal policy and full employment since President Johnson.”

The team accepted increased federal spending to help households and businesses during the pandemic. This position was emphasized in an article written by Ms Tanden and Ms Boushey with two co-authors in March, urging decision-makers to spend even though it would require large sums of money.

“Given the magnitude of the crisis,” they wrote, “now is not the time for policymakers to worry about increasing deficits and debt when considering what steps to take.”

Mr. Biden also appointed Adewale Adeyemo, the Obama administration’s chief international economic adviser, as deputy finance minister.

Candidates who need Senate approval will be introduced on Tuesday. Mr. Biden’s other national team, former Obama adviser Brian Deese, was used to lead the National Economic Council, but was not included in Monday’s announcement.

Mr. Biden’s team includes several labor economists, including Ms. Yellen, who has long been a champion of workers, and at times suggested that the unemployment rate be kept low for a longer period of time without worrying about inflation – that’s the idea , which some economists thought was prudent, but which has since been more widely accepted. At the Fed, it has balanced its preference for a strong labor market with inflationary concerns and political coercion.

In the early 2000s, Ms. Yellen played an important role in convincing the Fed’s policy-making committee to unite around achieving a 2 percent inflation target, instead of the zero inflation rate originally supported by then-Fed chairman Alan Greenspan. The Fed is raising interest rates to slow the economy and offset inflationary pressures, so targeting slightly higher inflation has opened the door to longer periods of cheaper borrowing, which could lead to stronger economic demand and lower unemployment.

Between 2014 and 2018, as chairman of the Fed, Ms. Yellen supported a patient approach to policy-making that weighed concerns that prices could warm up in the face of falling unemployment, as opposed to attracting more workers into the labor market.

In one of his bustling speeches in 2016, he suggested that allowing the labor market to expand without raising interest rates could help reverse the damage by attracting people from the sidelines and encouraging others to look for better jobs. He was criticized for his comments, later so, if not in action, he abandoned such an approach. He and his colleagues raised interest rates to offset inflationary pressures, but they did so at a very slow pace, arousing criticism. These interest rate hikes have since been seen as too aggressive and flawed in prematurely stifling stronger labor market expansion.

Ms. Yellen was also cautious when it came to issues such as inequality. In a 2014 speech, he suggested that rising incomes and wealth inequalities might be inconsistent with American values ​​- “including Americans who traditionally attach great value to equal opportunities,” he criticized Republicans ’remarks.

Much has changed since Ms. Yellen was in the Fed – in a way that could allow her to embrace some of her labor-friendly instincts if confirmed at the Treasury. While the direct economic power of the Secretary of the Treasury is somewhat limited, the post plays a significant role as fiscal advisor to Congress and the President, as well as overseeing tax policy through the Internal Revenue Service.

Inflation, once considered a real and threatening threat, has been low for more than a decade. Inequality, which has been called a political and liberal issue, is increasingly recognized by both Democrats and Republicans as a real economic constraint.

Some progressive groups have expressed concern that Mr Biden’s team may turn around too quickly to try to reduce the federal budget deficit when the pandemic subsides, citing earlier remarks by Ms Yellen and Ms Tanden.

Left-wing economists have become increasingly comfortable with deficit spending, and Ms Yellen has long favored government intervention as a way to boom the economy in difficult times. But he also said America’s debt burden is unsustainable and has generally preferred taxation to offset increased spending.

Mr Biden also expressed support for borrowing to help the current recovery, but sought to offset the costs of other economic proposals, such as the infrastructure bill and measures to mitigate climate change, with tax increases for high-income earners and companies.

In a 2018 interview at the Charles Schwab Impact Conference in Washington, Ms. Yellen said the U.S. debt trajectory was “unsustainable” and offered a remedy: “If I had a magic wand, I would raise taxes and reduce retirement spending.” Last year, he described the need to redesign the nation’s social safety net as “root canal economy”.

But Ms Yellen made it clear that deficit reduction is not a priority in the current crisis and that the federal government needs to spend the money needed to tackle the pandemic. In July, he testified before Congress with Ben S. Bernanke, a former former president of the Fed, and called for significant federal support.

“Because interest rates are extremely low and are likely to remain so for some time to come, we don’t think deficit and debt concerns are preventing Congress from responding robustly to this emergency,” he said. “Currently, the top priority is to protect our citizens from the pandemic and to pursue a stronger and fairer economic recovery.”

However, many Republicans began to warn of the deficit again, justifying rising debt levels to avoid another big virus-spending package.

Bridging these concerns will be the responsibility of both Ms. Yellen and Ms. Tanden, who, as the White House’s budget director, will be at the center of budget battles with Congress.

Some Liberal groups expressed concern about Ms Tanden’s 2012 comments to C-SPAN on possible cuts in safety net programs as part of a long-term agreement to reduce federal debt.

In an interview with the network, Ms. Tanden said the restructuring of Social Security, Medicare and Medicaid should be “on the table” in discussions on long-term deficit reduction, noting that the U.S. Center for Progress made such suggestions.

But in 2017, as Republicans prepared to approve the $ 1.5 trillion tax cut, Ms. Tanden did not want to return to deficit reduction in a future administration. “Only democratic presidents seem to count on the rule deficit” wrote on Twitter. – And this rule must die now. We shouldn’t clean up their mess.

Liberal senators, including Elizabeth Warren, Massachusetts and Sherrod Brown, Ohio, encouraged the selection of Mr. Biden’s team, including Ms. Yellen and Tanden. Brown said on Twitter that Ms. Tanden was “smart, experienced and trained,” and demanded that Senate Republicans strengthen Mr. Biden’s team.

Republicans did not unite in opposition, although on a question about Ms. Yellen, Senator Josh Hawley, a Republican of Missouri, criticized it as “a good example of corporate liberals”.

“Someone who has clearly done bidding for large multinationals,” he said. – The trade record is amazingly terrible.

Liberal economists welcomed the election. “There are some reasons to be optimistic,” said Stephanie Kelton, a professor at Stony Brook University and author of The Deficit Myth, that the budget deficit is not inherently bad.

Ms Kelton, as a member of a working group, helped shape the economic agenda during the Biden campaign and said the fact that Ms Bernstein and Boushey were among the economic thinkers gave reason to hope that progressive ideas would sound at the table. Ms Kelton said she continued to be wary of continuing to pay attention to the deficit and deficit reduction.