As President Biden prepares to leave the White House, he leaves behind an economic legacy marked by a historic pandemic that has crippled consumers and businesses across the United States
Biden has focused on economic recovery after inheriting a nation scarred by the coronavirus pandemic in 2021, a strategy seen in the country's solid GDP growth and low unemployment, economists told CBS MoneyWatch. By several key metrics, the economy is stronger than it was four years ago: Unemployment is near 50-year lows, wages are growing, and the U.S. has managed to avoid the recession widely expected by many on Wall Street as the Federal Reserve moves to raise interest rates to curb inflation.
"On the economic front, he should have a strong legacy," Mark Zandi, chief economist at Moody's Analytics, said of Biden. "He inherited an economy that was in a doldrums because of the coronavirus pandemic, and he left one that was in high gear. development, at least in general.”
Zandi added, "How much credit he gets for that, that's a legitimate debate, but I think he deserves a lot of credit."
Zandi noted that several landmark pieces of legislation passed under Biden, including the $1.9 trillion American Rescue Plan Act (ARPA), have helped stabilize the country and achieve growth that outpaces most other major economies around the world. .
Biden also has some wins on health care, like new $2,000 Pay out of pocket There is a $35 cap on prescription spending and a $35 cap on insulin prices for Medicare enrollees.
But he added that in retrospect, trillions of dollars in additional federal stimulus may have played a role in the surge in inflation over the past few years, which Zandi said was also fueled by the economic fallout from Russia's invasion of Ukraine.
Zandi said ARPA was "very controversial, but ultimately it brought the economy back to full employment."
While Biden's policies are key to helping the economy recover from the pandemic, millions of Americans continue to struggle with a cost-of-living crisis worsened by the worst inflation in four decades. The long-term challenges of housing affordability will only intensify under the Biden administration, and wealth inequality in the United States today remains near all-time highs.
To be sure, health care, childcare and education costs have increased exceed inflation This has put pressure on millions of households over the years, leaving many vulnerable to even a minor economic downturn. But a surge in inflation in 2022 will exacerbate these existing financial woes, said Lindsay Owens, executive director of the Groundwork Collaborative, a progressive economics think tank.
"The U.S. economy has long been characterized by a lack of ability to make big-ticket purchases," Owens said. "Housing has been out of reach, health care has been expensive, child care has been expensive — and that's been true before Biden."
Meanwhile, Biden's plan to wipe out student loan debt is largely shot down by courtThat’s despite the Department of Education using other means to provide relief to millions of borrowers. Housing costs continue to soar under Biden as home prices rise and mortgage rates soar after the Federal Reserve raises interest rates to combat inflation.
The result: Under Biden, many families are still suffering from the chronic wallet problems that were prevalent for decades under previous presidential administrations. During the pandemic, soaring costs for essentials like food, fuel and rent have only exacerbated the country’s endemic instability — a wrenching financial insecurity that has left tens of millions of Americans vulnerable to job losses, health care problems or even the risk of a slight economic downturn.
Biden’s legislative victories — ARPA and the Infrastructure Investment and Jobs Act of 2021, as well as the Inflation Reduction Act and CHIPS Act of 2022 — add trillions of dollars in additional federal spending. The underlying idea of these efforts is to revitalize the U.S. economy by investing in key industries, such as building semiconductor chip factories, rebuilding U.S. roads or accelerating the shift to green energy.
But economists say it could take years for those efforts to pay off. Meanwhile, U.S. debt has soared to a record $36.2 trillion as of mid-January, thanks to fiscal stimulus authorized by Biden and Trump and Trump's 2017 tax cuts.
As federal spending exceeds revenue, the nation will face difficult choices, such as whether to raise taxes, cut federal programs or both. When asked to describe Biden's economic legacy, Scott Lincicome, associate dean for general economics at the Cato Institute, summed it up in one word: "disheartening."
“If you look at the fundamentals — economic growth, jobs — things are pretty good,” added Lincicome, who calls himself a “libertarian free marketeer.” “But if you look deeper, there are some pretty significant issues.”
Chief among them, Lincicome said, is the nation's rising debt. U.S. Treasury yields have been rising ahead of Trump's inauguration on Monday, in part due to concerns that the U.S. may struggle to repay its debt in the coming years.
“In terms of what Trump inherited — and it’s not just Biden’s fault, Trump did a lot of COVID spending — but we’re at a stage now where you can see the bond market is chirping, You can see inflation remains stubbornly above our expectations," Lincicome noted. "The (Congressional Budget Office) and many others agree that debt is a very urgent issue."
Despite such concerns, economists interviewed by CBS News said Trump will inherit a relatively strong economy when he takes office. So it's no surprise that Zandi and Lincicome had the same advice for how the Trump administration should handle the U.S. economy: "Do no harm."
"The best thing Trump can do is do nothing," Zandi said. "Biden's economy is in trouble, and he's leaving behind an economy that's firing on all cylinders."
Trump, for his part, has signaled his intention to reshape the economy through measures such as higher tariffs, further tax cuts, reductions in federal regulations and mass deportations of undocumented immigrants.
Trump-Vance transition spokesperson Anna Kelly said in a statement to CBS Financial Watch, "Joe Biden's legacy is marked by severe inflation, a criminal invasion of immigrants and America's rise on the world stage. "Thankfully, in just five days, President Trump will usher in a new golden age of American success and fulfill his mission to make America rich, safe, strong, and great again." "
Economists believe some of Trump's stated plans are potential inflationAlthough some question whether the president-elect will implement all of these measures, such as imposing broad tariffs on all imports.
“We expect tariffs on Chinese imports and autos, but not broad-based tariffs, to create economic and political risks that we believe the White House would prefer to avoid,” Goldman Sachs analysts wrote in a December research note ”
Meanwhile, the Trump administration wants to extend its 2017 Tax Cuts and Jobs Act (TCJA), a measure the nonpartisan Congressional Budget Office projects could add $4.6 trillion to the federal deficit over the next decade. Trump has vowed that his tariffs will raise enough money to pay for the tax cuts, but economists believe that proposal is unlikely to materialize.
Lincicome noted that tariffs could add "maybe hundreds of billions of dollars, but that's just the total, and you're still in a huge hole."
Given the TCJA tax cuts, extending them could also benefit America's wealthiest households taxes on high earners Far more than low- or middle-income Americans. The wealth of America's richest people has soared over the past four years, with Elon Musk, the world's richest man and a close adviser and supporter of Trump, now worth $450 billion, up from $1,750 when Biden was inaugurated in 2017. More than twice the net worth of US$1 billion. According to the Bloomberg Billionaires Index, 2021.
in his Farewell words On Wednesday, Biden warned that the growing concentration of wealth in the United States posed serious risks to the country.
"Today, an oligarchy of extreme wealth, power and influence is taking shape in America that literally threatens our entire democracy, our fundamental rights and freedoms, and everyone's fair chance to succeed," Biden said.
Economists predict that is unlikely to change under Trump. “The big problem with inequality in America is simple: it’s the rise in income at the top,” Owens noted.
“Unless we tax the top, income inequality will get out of control,” she argued.