Upon taking office, President Biden will be faced with more challenges than most American Presidents had to manage during the entire terms of their administrations. Between a dilapidated economy, a weakened healthcare infrastructure, a politically divided nation, and several ongoing wars, the list of priorities could not get any longer. Which of those priorities the administration tackles first will not be an easy task to accomplish. One, however, it can subdue immediately is the economy by applying a technique most avid chess players use, namely try not to move the same piece multiple times in the opening. Here, I am outlining three steps it can take to make this happen.
The past six months alone, Congress injected approximately $3 Trillion into the economy through way of stimulus funding. When taking into account the massive tax cut the 2018 legislation provided to corporations, it begs the question: how much farther can the next administration go? We know the pandemic is not yet over, which means small businesses will still struggle to reopen, let alone stay profitable. The incoming administration will need to find a more sustainable, yet creative, way to deal with the economy, which includes the following:
1) Repeal the 2018 corporate tax cut legislation and replace it with one that provides for a claw-back provision.
When the law was passed, the economy was doing well and therefore did not need the additional tax benefit. By repealing that legislation, the administration can provide itself with a much-needed option to tackle a potential recession that will likely follow the global pandemic.
2) Provide for a mechanism for direct lending to small businesses and entrepreneurs via a federally established system.
A much more long-term economic plan will be needed to assist small businesses that are being crushed by the global pandemic. Going to Congress every six months to ask for economic assistance may prove both politically divisive and financially inefficient. A better way to counter this is by providing a mechanism for small businesses to borrow directly from the treasury. This will ensure both better accountability and timeliness in the funding process.
3) Recapitalize the Social SecurityAdministration and allow it to make early monthly payments to unemployed citizens.
This payment can be made in the form of a loan, which the borrower must repay once reemployed. The structure to make those loans and repayment can be the same one we use to allow workers to borrow from their 401ks.
While this process may not be perfect, it will certainly give the administration time to breath while dealing with the other priorities.