Although Trump vowed in his departure speech that he will be "back in some form", it is unlikely to be in the role of President. His age may not necessarily count against him – he will be 78 at the time of the next election which is the same age as Biden today – but a bigger problem is that many Republican donors are unlikely to want to renew their association in the wake of Trump’s role in inciting the storming of the Capitol two weeks ago. Although Trump is the only President to have twice been impeached, he is still the figurehead for a movement which has huge support in US politics. He may yet play a pivotal role in endorsing a credible nationalist candidate who will make a successful run for the White House in 2024. That, however, is a topic for another day.
As Biden settles into his new role he has his work cut out. As he acknowledged in today’s speech he takes office at a time of unprecedented disunity and the divisions which have plagued American society are not about to suddenly disappear, partly driven as they are by deep-seated economic issues that will take years to resolve. That said Biden is more likely to pour oil on the waters than oil on the flames and the absence of inflammatory messages from the White House which did so much to foment anger in US society will hopefully go some way towards lowering the temperature.
Short-term issue: Stabilising the economy
Social divisions are not the only problem facing the US. In the short-term, the Biden Administration will have to deal with the economic fallout from the pandemic which has now claimed the lives of 400,000 citizens (for the record, this is roughly equivalent to the population of Tulsa). His nomination of Janet Yellen as Treasury Secretary suggests he means business. Yellen is a heavyweight economist who knows her way around Washington and assuming she is accepted by Congress, Yellen will be responsible for implementing the $1.9 trillion fiscal package unveiled last week which will provide support to an economy battered by Covid.
In particular the Administration seeks to provide labour market support, including sending out cheques for $1,400 per person for those under certain income thresholds; extending emergency unemployment insurance programmes through the end of September and a plan to raise the minimum wage to $15 per hour. In her Congressional confirmation hearing yesterday, Yellen responded to concerns about raising the minimum wage by citing the economic literature indicating that it would have only have minimal effects on job losses. Against that estimates produced by the Congressional Budget Office in 2019 suggested that such an increase would reduce employment by 0.8% which is not exactly trivial.
Longer-term issues: China and the climate
In addition to the short-term challenges posed by the Covid crisis, some of the issues that the new Administration will face are more pressing than they were four years ago. China has loomed large in US thinking for a number of years. Trump’s solution to the problem was to confront China head-on and although Yellen called China America's "most important strategic competitor" and said the Biden administration was prepared to use a "full array of tools" to address its "abusive, illegal and unfair practices" it is an even more formidable economic power than four years ago. In simple USD terms, the US economy is now only 40% larger than China compared to 66% four years ago and measured in PPP terms is now around 14% smaller versus broad parity in 2016. Trump’s view that “trade wars are good, and easy to win” was wrong in 2018. Every year that passes disproves this assertion.
Although Chinese GDP measured in dollar terms is unlikely to exceed that of the US in the next four years, it will continue to close the gap. According to the IMF’s latest projections, the US economy may only be 12% larger than China by 2025 which could well nudge ahead before the end of the 2020s. Although it may be toppled from the number one spot before the decade is out, the US has enormous soft power that ought to allow it to continue wielding considerable influence for decades to come. The extent to which it will be able to do so depends on how it manages relationships with its allies. Biden is likely to pursue a considerably different approach to Trump who adopted the old Lord Palmerston maxim that there are no such things as permanent friends, only permanent interests. With Biden expected to signal that the US will rejoin the Paris climate accord and halt its withdrawal from the World Health Organization, this will act as an indication that the US intends to reassert its position as a constructive player on the world stage which will burnish its credentials in the years to come.
Climate change is an area where the US voice has been missing on the world stage in recent years. The Trump Administration took the view that regulations were all cost and no benefit. Yet climate change is increasingly viewed as a national security issue and was recognised by the Obama Administration as a major problem. A report issued almost a year ago by the National Security, Military and Intelligence Panel on Climate Change highlighted the damage that rising temperatures could inflict on the US economy. Efforts to combat climate change require global cooperation and without US support it would be almost impossible to make any headway. A more responsible approach by the Biden Administration would be most welcome.
The future is yet to be written
There are conflicting schools of thought as to what the
departure of Donald Trump from the White House will mean for the future of the
US. Optimists such as Max
Hastings argue that just as America was able to put the turmoil of the
1960s behind it and reinvent itself to become the world’s undisputed
superpower, so it will similarly be able to overcome the unrest of recent years
to become the confident, outward-looking power that we have grown up with. More
pessimistic commentators, such as the prominent conservative Andrew
Sullivan, believe that the fissures opened
up by the Trump era represent a permanent shift in the US political scene as
America adjusts to a new world order. We can only wait for events to unfold.
Twenty years ago it was inconceivable that a populist such as Donald Trump would ever have got near the White House. The classic TV drama, The West Wing, portrayed the US as it liked to see itself – a benevolent superpower acting as a force for good, led by an exceptionally smart president with a positive view of what it could achieve (if you haven’t seen it, it is worth watching and viewers in the UK can catch it here). As the fictional President Bartlet once said “We will do what is hard. We will achieve what is great. This is a time for American heroes and we reach for the stars.” Joe Biden is no Jed Bartlet but if he can put the US back on an even keel he will be hailed – perhaps at home but certainly abroad – as the man who rescued the US from itself.
