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Breakingviews - Biden win sets scene for storm before the calm

U.S Democratic presidential nominee Joe Biden speaks about election results in Wilmington, Delaware, U.S., November 6, 2020. REUTERS/Kevin Lamarque - RC24YJ9OU7P9

NEW YORK (Reuters Breakingviews) - Americans chose Joe Biden as their 46th president. That should usher in a more predictable period for policymaking, and decisive action on containing Covid-19. But he faces three major challenges: voters’ effective rejection of his party’s punchier ideas, the fact that sitting President Donald Trump does not intend to go quietly and – most difficult of all – weak or non-existent control of the Senate.

Biden promised big things, from tax increases on big earners to massive investments in green infrastructure. Without a decisive upper house majority, those will be hard to achieve. Yet even they were tamer versions of what some Democrats wanted. Biden’s plan to double capital gains tax is bad for billionaires; that’s child’s play compared with Oregonian Senator Ron Wyden’s idea of charging it annually based on market prices. Wealth taxes and fracking bans? Off the menu.

Even plans that are uncontroversial among Biden’s colleagues, like raising the federal minimum wage to $15 an hour, will struggle to get through a GOP Senate, or one where Democrats have only a one-vote majority. Posts that require lawmakers’ approval, like Treasury secretary or secretary of State, would require centrist candidates. Progressive Democrats like Senator Elizabeth Warren could be marginalized.

Then there’s Trump. He is intent on litigating the result, and there’s scope for drawn-out recounts. Either way, he remains president until Jan. 20, and is not without power. Presidents typically spend this period issuing pardons. Jimmy Carter worked until the eleventh hour trying to free hostages in Iran. Trump could use his time more fiendishly.

A risk is that he pushes Republican legislators to do nothing – or precious little – to help businesses and families impoverished by Covid-19. Biden could then inherit an economy on its knees. The International Monetary Fund has warned that the pandemic is likely to increase social unrest “for years to come.” Months without relief, and an incoming government unable to pass redistributive economic policies, would only increase the despair.

Trump would also have ample time to undermine his successor. Biden has pledged to be a president for all Americans. But Trump can further drive a wedge between Republicans and Democrats using his 88 million Twitter followers and red carpet at Fox News, and his false claims of electoral victory and widespread voter fraud set the tone. Biden stands for calm, but first comes the storm.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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