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Mainstream, VOL LIX No 4, New Delhi, January 9, 2021

Challenges for New President Joe Biden | Anil K Kanungo

Saturday 9 January 2021

by Anil K Kanungo

The verdict is clear Joe Biden is set to become 46th president of USA on January 20, 2021. He will become the nation’s oldest president, aged 78, and possesses nearly a half-century in elected office, including eight years as vice president and 36 years as Senate representative of Delaware. Kamala Harris will be the new vice president.
All this have also signalled a strong message that amid continuous uproar and political disturbance, USA legal system could finally manage to declare Biden to be the new president. The chaos, confusion and political divide post-election witnessed send a strong signal that American society is undergoing a serious change in its attitude and thinking. Once coveted strengths of the US such as openness in political system, competitive spirit, liberal atmosphere, economic opportunities for one and all have come under a cloud. Core competence in its transparency and domestic political system guided under ‘military industrial complex’ once allowed it to stand as ‘numero uno’ in modern world economy have shown signs of degeneration and deterioration.

This domestic divide and frustaration will pose serious challenges for Biden. It will also trigger America to reorient its foreign policy to secure that special place. America’s influence on Asia is on the wane. In the face of domestic challenges, President elect Biden may well find it simpler to turn his attention to the global stage. Biden may drop the major economic doctrine the ‘America First’ and instead pursue a foreign policy characterised by ‘interdependence’ and ‘internationalisation’. ‘Interdependence’ will augment the lost ground of globalization and ‘Internationalisation’, will steer America’s post Covid-19 objectives in the wider world. Faith in the multilateral institutions such as WHO, WTO, UN will be revived. Greater efforts will be pursued with the allies instead of undermining their strengths.

Internationalisation will define a new vision and approach of Biden administration to China. It will not continue with ‘half-baked’ economic de-coupling from China. USA will strengthen its skills in soft power while handling China. USA under Biden administration will seek to strengthen its Asia-Pacific economic alliances and security partnerships with the help and support of China. It will engage selectively with China on global health, climate change, environmental and development issues.

New economic posturing through tariff liberalization and strengthening of China-US trade deal, world economy may notice trends of pre-Trump’s era. Free flow of capital to and from Asia and China could rescue the lost ground of trade and economic growth engineered by US-China trade war and due to unprecedented Covid-19 global pandemic.

Unemployment is a growing menace currently. More than 44 million Americans were temporarily laid off during the first wave of the pandemic in the spring. More than a quarter of those made redundant had their jobs culled permanently. Future lockdowns are not completely avoided as the pandemic is still rearing its ugly head. The shutdown has already sparked a wave of bankruptcies.

Biden is anticipating prospects of next round of lockdowns as he assumes office; discussion on this front is already in the air. This fresh lockdown would spur a fresh wave of layoffs. Major service sectors of the economy — events, aviation, tourism and hospitality — would be in deep trouble and would likely need an additional bailout.

It is possible that Obamacare may get a fresh boost. Biden’s target of spending worth $7 trillion over the next decade on huge infrastructure projects to help tackle climate change, boost education, health care (Obamacare), and affordable housing are going to get priority.

Next impending challenge is handling the spectre of global climate change. Although Biden has given indication and promised in political campaigns of rejoining key international institutions such as the Paris Agreement on climate change, favouring the role of WTO, and may have an interest in coming back to one of the largest continental arrangements such as the Trans-Pacific Partnership (TPP), such moves will be hard to materialise because they have lot to do with critical domestic issues and politics. For instance, designing trade policy like Canadian-US-Mexico Agreement (CUSMA) under Trump to reconfigure North American automotive production through a more stringent rule of origin to basically create and steal employment for America thus justifying its ‘America First’ doctrine will be antithesis to Biden’s ‘Internationalisation’ plan. This has the potentiality to boomerang. Whether or not he joins multilateral agreements like the TPP will depend how much of political capital he can manoeuvre considering the Senate is tilting in favour of Republicans.

A Biden presidency will perhaps not set an ambitious global agenda considering domestic America is in a turmoil. A soft stance of foreign policy will be pursued to set the domestic house in order. At a time when the healthcare, economic, environmental and security challenges facing the globe are more immediate and pressing than at any time since the Second World War, the ideas, resources, and long-term effort needed to solve these challenges will demand interdependence and support from allies rather than expecting everything from within. America’s foreign policy under Biden leadership will be outwardly and accommodative.

(The author is former senior faculty, IIFT, and currently Professor, & Area Chair, Dept. of Economics, Lal Bahadur Shastri Institute of Management, Delhi)

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