December 8 that U.S. media said that U.S. President-elect Biden said that if it could help turn the economic situation around, the federal government should not shrink back for fear of increasing fiscal deficits.
He said in Wilmington, Delaware, on the 4th: “Take action now, even if there is a fiscal deficit, we can boost economic growth in the near future. In fact, economic research shows that in a situation like this crisis today — especially in the case of low interest rates — inaction to fight the pandemic will hurt the economy, hurt the workforce, weaken economic growth, and lead to an increase in national debt.”
Biden supports a $908 billion ($6.5 billion) coronavirus relief package that is under negotiation in Congress, the report says that the November employment report shows that the situation is “gritty serious” and further action is needed.
He said: “Any package adopted during the ‘Limp Duck’ period is not enough. This is just the beginning. Congress needs to act again in January next year.”
The U.S. reported 245,000 new jobs in November, with unemployment falling to 6.7% from 6.9% in October.
The number of new jobs in November was the smallest in months, far lower than analysts had previously expected about 450,000.
Former Fed chairman Janet Yellen said that given the dual crisis of the COVID-19 epidemic and related economic consequences, “urgent” action is crucial. Biden chose Yellen as the next finance minister.
“Inaction will lead to a self-reinforced economic downturn that will cause more damage,” Yellen said.
The report said that this is good news for liberal economists and advisers of former President Obama. They believe that deficits are irrelevant in the near future.
“It’s really exciting to hear Biden team members like Yellen say that,” said Pete DeAlessandro, a 2016 and 2020 campaign adviser to Bernie Sanders, who was in the Democratic presidential race.
“We don’t have to cut, cut, cut, cut, cut, cut, we actually need to do the opposite, so we can get out of trouble,” DeAlessandro said.
Biden also appointed Nella Tanden, director of the Center for American Progress Research, as the next director of the White House Budget Office.
“Tandon is not the progressives’ first choice, but she’s more appropriate than to arrange someone who will immediately turn to debt resolution,” said Alexandra Rojas, executive director of the liberal Justice Democrats.
“Tandon has been countering the senseless concerns about the deficit over the last few years,” Rojas said.
The report pointed out that liberal economists are increasingly agreeing that debt and deficit should not be the top concern of the broader discussion on economic growth, especially in view of the current economic situation in the context of the COVID-19 epidemic.
“The future may be different, but we need to consider fiscal policy based on the view that deficits are inevitable – and likely still very large – for achieving the goal of full employment and financial stability,” said Lawrence Summers, a former senior economic adviser to the Obama administration.
A new discussion draft paper written by Summers in collaboration with Jason Furman, a former Obama economic adviser, believes that given the current historic low interest rates, adopting “overly restrictive” fiscal policy may not achieve full employment.
The report said that regardless of future plans, the public health crisis has accelerated the growth of government spending and exacerbated the debt and deficit crisis that has become out of control.
The federal government’s deficit of $3.1 trillion for the fiscal year ended on September 30 is more than twice the previous record set by the George W. Bush and Obama administrations after the 2008 economic crisis.
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