The Indicator from Planet Money - Biden's Econ Plan: 3 Indicators To Watch

President Biden recently announced his $1.9 trillion American Rescue Plan, targeting pandemic relief and economic recovery. We discuss 3 indicators to watch to measure the Biden economic agenda's success in the coming years.

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who won Stacey in Cardiff? This is the indicator from Planet Money. Well folks we have a new president. It's inauguration day. We do have a new President Joe Biden was sworn in as the 46th president of the United States at noon today and his presidency begins with a lot of uncertainty hanging over the economy with the pandemic still raging. There are nearly 10 million fewer jobs than before it started and ask for President Biden's economic agenda his proposals. There are two parts to it as he said in his speech last week to step plan of rescue and Recovery.

A two-step plan to build a bridge the other side of the crisis me face to a better stronger more securamerica. The rescue part of the plan is targeted at supporting people and businesses that are still struggling while the pandemic is going on more money for local governments in small businesses for unemployment insurance and those $1,400 checks to individuals. And as part of the agenda of the recovery part is targeted at helping the economy in the long-term. Once the pandemic is finally behind us infrastructure manufacturing Innovation research and development clean energy Investments and a caregiving economy and skills and training needed by workers to be able to compete and win in the global economy of the coming years. Just how much of the Biden agenda will actually get passed after it's negotiated in Congress and whether the agenda will succeed if it does get past is just still too early to know but there are

And we can already start asking about how to measure the Biden agenda success in the coming years. So today in the show. We're going to give you three of them plus the indicators to follow in order to answer those questions right after the break.

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It seems so long ago, but that 3.5% unemployment rate was the lowest unemployment rate in half a century. Now. The unemployment rate is 6.7% And the labor market is actually worse than even that number implies because the unemployment rate doesn't count people who have given up looking for jobs either because they had to stay home to take care of kids or relatives or because they got discouraged and hopefully a lot of those people will start looking for jobs and getting them in the coming months and years as the economy reopen and if the unemployment rate can get back down close to 3.5% again, or maybe even lower than that, it will be a sign that the labor market has recovered and there's a lot riding on this strong job market leads to other favorable trends, for example, before the pandemic household of all incomes and backgrounds, including all racial and ethnic background. We're getting raises D cerezas income inequality was falling as a matter of fact, and the poverty rate has gone down for 5.

Straight years that's all largely the result of a tight labor market the strong labor market. And so that is the question that we're going to be asking question 1 will the labor market make a comeback question number two how much will divide Administration reverse parts of the Trump economic agenda there a couple of different indicators that we will be paying attention to verse up taxes. Yes. Remember that before the pandemic the most significant economic legislation that was passed during the Trump years was the tax cut and jobs act which has been passed at the end of 2017. There was a lot in that bill, but maybe the most important part was a big cut in the tax rate paid by American corporations 5% of the money corporations made each year all the way down to 21% MC major overhaul of the tax code. So that is the number that we are going to be following because President Biden campaign on raising the corporate tax not all the way back to where it was before President Trump took off.

Chris but you know higher than it is now the other indicator we're going to be watching to see how much the Biden agenda undoes. The Trump agenda is about the trade war with China the Trump Administration raised the average tariff on Chinese Imports to the US from about 3% to more than 19% last year. Will those terrorists go back down. That's the question. We're asking not necessarily or at least not immediately for now President Biden. His only said that he's going to consult with allies other countries in Europe and Asia about how to deal with China and keep in mind that right. Now there actually is still a lot of bipartisan support in the US to continue being tough on China and China itself is viewed very unfavorably in a lot of countries that are allied with the US that's largely because these countries believe that China did a bad job of handling the outbreak of coronavirus which originated in China before spreading out so there is a chance that the trade war with China Wilkins.

Can you add an easy way to see if it does is to follow the average tariffs on Chinese Imports and check to see if they stay roughly where they are and finally question 3 how much money will the federal government borrow as part of the Biden economic agenda. So far up the by the administration is communicating that it is comfortable borrowing more money through the treasury market to finance its spending plans and you're one of the arguments that the Biden Administration is making its saying that now is actually an appropriate time for the government to be borrow more money in order to provide economic stimulus and Investments for table here is Janet Yellen president finds pick for treasury secretary during her confirmation hearing on Tuesday right now with interest rate to the store close. The smartest thing we can do is act big ears. Will Janet Yellen means because interest rates are so low yelling is arguing that it is cheap for the government to pay back that debt so that the government should borrow money now to

The economy the national debt going up there for at least for a little while won't be a sign of failure to the by the administration. It'll just be a sign that it is pursuing its goals in Decatur where you going to be watching the national debt to GDP ratio, this ratio compares the amount of money that the government owes to the value of everything the economy produces in a single year during the Trump year was the national debt to GDP ratio has gone up from roughly 75% to where it is now, which is close to 100% and a big amount of the rise in the debt was because of the money that was spent in response to the covid recession, but even so that is the highest amount of debt as a share of the economy since just after the second world war here is why we'll be watching the national debt-to-gdp ratio closely. There has been a fascinating debate with an economics in recent years. What is a condom is to become more comfortable with the federal government running up higher debt saying is not as Danger.

Economist once believed but other Economist disagree they worry for example that running up too much debt will lead to much higher inflation or that it will lead to interest rates going way out if investors who lend money to the government start getting nervous and with the national debt now forecasted to go higher than it's ever been is a share of the economy. We are going to get a chance to find out who's right. So either way it's going to be a fascinating experiment to watch and that is what we plan to do what we watching. Feel free to watch along with us more indicators TK.

This episode of the indicator was produced by Jamila Huxtable and fact-checked by Sam side indicator is edited by Patty Hearst and it is a production of NPR.

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