No one would argue that there is little to be thankful for in 2020. Let’s consider it a bit further. The COVID-19 pandemic has been stressful and isolating for many people. Gatherings during the upcoming holidays can be an opportunity to reconnect with family and friends. But this holiday season, consider how your plans can be modified to reduce the spread of COVID-19 to keep your friends, families, and communities healthy and safe. Looking ahead, let’s examine the Biden economic recovery plan highlights.
Shoring Up the Small Business
We have been challenged with a financial, social, and economic environment that we have never faced in our recent history. Covid-19 has disrupted our social and economic order at lightning speed and on a scale that we have not seen in living memory. The virus is causing tragic loss of life, and the lockdown needed to fight it has affected billions of people. What was normal just a few weeks ago; going to school, going to work, being with family and friends; is now a huge risk.
The challenge now is how we deal with it. How we deal with a pandemic with global ramifications. The United States is the global voice of reason. We need to lead the way to the solution. Our political leadership appears to be in some agreement. Regardless of your affiliation we need to move forward. Given the necessary containment measures to slow the spread of the virus, the world economy is taking a substantial hit. This is especially true for retail, hospitality, transport, and tourism. In most states the majority of workers are either self-employed or employed by small and medium-sized enterprises. These businesses and workers are especially exposed.
So, as we’ve heard, we’re all in this together. Perhaps truer words may have not been spoken. So, what needs to be done?
Although the coronavirus pandemic would be his administration's first priority, Biden said he wanted to expand the use of Buy American rules to help boost domestic manufacturing and create millions of new production jobs, including a million in the auto sector. I’m all in on the buy American platform but it’s not that easy. It has to make sense to the consumer to buy in. And the answer is not increasing import tax on foreign goods. We need to manage labor costs and efficiencies in our manufacturing to produce quality goods at an affordable price. In the 2-5 years it will take to rebuild our domestic economy we need to roll up our sleeves and attempt to resurrect the work ethic of the post-depression era and reclaim our status as the world leader in manufacturing.
The former vice president's economic plans include a 10% tax on firms who offshore US manufacturing and would eliminate loopholes that help U.S . multinationals to shield their foreign profits from the Internal Revenue Service. Projects that commit to rebuilding or strengthening domestic manufacturing would benefit from a 10% tax credit.
Mark Zandi, chief economist at Moody's Analytics, is quoted as saying the "carrots and sticks" in Biden's plan could have a meaningful impact on where US firms locate their manufacturing. But winning the White House is one thing. It would also require Democratic control of Congress which is unlikely.
"If the Senate remains under Republican control, it is difficult to see Biden getting much done legislatively, including implementing his 'Made in America' plan," Zandi said.
Huge Spending Plans
Despite forewarning of the dangers of a spiraling deficit as Delaware's senator, Biden plans to enlarge the federal deficit , already at $3.3 trillion or 16% of GDP, with his huge spending plan worth $5.4 trillion over the next decade.
Biden's strong commitments to tackling climate change, boosting access to health care, addressing the lack of affordable housing and confronting racial inequality have been lauded by US progressives. According to his campaign website, joebiden.com, a huge investment to rebuild America's crumbling infrastructure will help him meet his target for full employment, while education will account for most of the new public spending. It’s easy to see an 21st century version of Roosevelts “New Deal” a very real possibility to generate employment.
Large tax hikes, mostly on the wealthy, will reverse some of Trump's $1.5 trillion in tax cuts and will offset almost two-thirds of his spending commitments; the rest would benefit from the Federal Reserve's current monetary policy, analysts have said.
Tightrope On Trade
Corporate America will pressure Biden to undo many of Trump's aggressive trade policies that, as well as tackling China's economic threat, have weakened ties with the United States' strongest allies, including Mexico and the European Union.
But trade experts have said Biden's hands may be tied by his commitment to voters through the Made In America pledge, and that tariffs may remain for some time, despite the huge cost to US importers.
"Biden will continue to put pressure on the Chinese to abide by international trade law, but he will not do this through a unilateral trade war," Zandi predicted. "He will reengage with the World Trade Organization and other multilateral trade organizations to put pressure on the Chinese to change their behavior."
Pulling the country out of this economic tailspin will certainly require significant government assistance to generate expedient and effective results. While Trump warned of financial collapse if he failed to win a second term, voters seemed increasingly convinced by Biden's economic plans. Inflation, our massive deficit and stock market volitivity are just a few of the land mines which the Biden team will need to navigate to be sucessful.
Stay safe everyone and make the very best of the holiday season.
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