As details become clearer for President-elect Joe Biden’s cabinet and agenda, UA Walton College economist Mervin Jebaraj says control of the U.S. Senate will dictate how aggressive Biden can be in addressing the coronavirus crisis and the havoc it has wrought on American commerce.
Biden has indicated that former Federal Reserve Bank chair Janet Yellen will be nominated as his Treasury Secretary. Jebaraj said she will be one of the most experienced people to hold the position if she’s confirmed for the cabinet post.
“If she is confirmed to the Secretary of Treasury position, she comes to the position with a lot of experience for economists and public policy roles,” he said. “She will be the first person to get the trifecta roles: the CEA – Chair of the Council of Economic Advisors – the Federal Reserve Chair, and then the Secretary of Treasury.”
Jebaraj said the current economic crisis caused by the COVID-19 pandemic will test Yellen’s skills.
“She’s going to be working on the fiscal policy side as opposed to the monetary policy side. But I think we’ve come to expect some closer coordination between the Federal Reserve and the federal government in general over the last couple of crises,” he said.
When Biden takes office in January, the coronavirus-wrecked economy will be a high priority. Jebaraj expects a more coordinated federal-state response to control the pandemic, to distribute a vaccine, to attempt a stimulus plan, and to utilize tools to keep the financial markets liquid.
Jebaraj also said Biden’s economic and jobs plan will likely push for green technology and climate change investments, more skilled worker training, a potential tax hike on high-income earners, as well as reset a variety of trade relationships.
Any success will depend on which party controls the U.S. Senate.
“All of that is contingent of course on the outcome of the Senate runoffs in Georgia. So I think people only expect all of these policy proposals to be enacted if the Democrats control the Senate. If not, I think you would expect something of the slow slog that we saw economically sort of between 2010 and 2016, when the administration was from one party, but Congress was split,” he said.
There is a runoff for two Senate seats in the Peach State. If Democrats win both seats, the Senate will be split 50-50 with Vice-president-elect Kamala Harris capable of breaking any ties. If the Republicans win one or both seats, they will control the upper chamber.
You can watch Jebaraj’s full interview in the video below.