President-elect Joe Biden wasted little time after the weekend’s celebrations in releasing the Biden-Harris jobs and economic recovery plan, which includes extending the COVID crisis unemployment insurance as well as offer a “comeback package” for Main Street businesses and entrepreneurs.
Before Biden’s announcement of a COVID-19 task force Monday, published reports said Friday that Biden plans to tap former Commodity Futures Trading Commission Chairman Gary Gensler and KeyBank NA executive Don Graves as part of his presidential transition to advise Biden on Wall Street.
As to assembling his cabinet, while “lots of names will be floated,” Greg Valliere, chief U.S. policy strategist for AGF Investments, said Monday during the Schwab Impact virtual conference, Biden’s likely chief of staff will be Ron Klain, who was his chief of staff while he was vice president. “Around Thanksgiving you’re going to hear trial balloons and leaks.”
As to Sen. Elizabeth Warren, D-Mass., becoming Treasury secretary, Valliere said, “I think they don’t want to give up a seat in Massachusetts; I think there would be concern that [Senate Majority Leader] Mitch McConnell might not go along with her; he might be able to block her nomination.”
Federal Reserve Governor Lael Brainard is the “odds-on pick” for Treasury secretary, Valliere said.
- Jeffrey Zients, former director of the National Economic Council;
- Jared Bernstein, Biden’s former chief economic advisor;
- Heather Boushey, economist; and
- Ben Harris, Biden’s former chief economist and chief economic advisor.
Legal Challenges and Senate Race
Michael Townsend, vice president of legislative and regulatory affairs at Schwab, said during the virtual session that “We still have a lot of counting to go, counting in the battleground states and in California and New York; they’re going to be a couple weeks before they have all of the results in,” and they’ll face legal challenges.
“It looks like Joe Biden is possibly on a path to getting the 306 electoral votes, the same number that Donald Trump got four years ago,” Townsend said. “I think that gives enough wiggle room that you’re not going to have one state legal challenge overturn the entire outcome.”
That said, investors need to pay attention to the battle for control of the Senate, Townsend continued. “That’s really going to determine what the achievable policy agenda could be for a Joe Biden presidency; if Republicans have control of the Senate, then it’s going to be very difficult for him to get his policy initiatives through.”
That means “all eyes on Georgia,” where there are two runoff elections for Senate coming up in early January, Townsend said. “Even though we’re through Election Day, we’ve got about eight more weeks before we’re really going to know the lay of the land in Washington.”
Valliere added that while most of President Donald Trump’s legal charges regarding the election “seem frivolous … we have to go through that process.”
Seventy million people voted for Trump and “some are likely angry,” he said. It will take the “next couple of weeks until everything is settled.”
The Senate, Valliere agreed, “is really important. … For Biden to get along with [Majority Leader Mitch] McConnell, they’re going to have to move to the center. They’ve known each other for decades; they both pride themselves on their ability to cut deals. I think we will get some deals cut.”
Chances of Stimulus
William Dudley, former president of the Federal Reserve Bank of New York, added during the virtual panel that “There will be pressure for a fiscal package” before the Biden inauguration on Jan. 20.
“I think it’s important that it’s [a stimulus package] done before the inauguration in January because that’s still several months away, and the fact is, as the pandemic worsens, we’re going to see more social distancing, more shutdowns and that’s going to start to weigh on the economy,” Dudley said.
Valliere noted that he worried that stimulus may come “later rather than sooner,” as Trump may not be as “engaged” over the next two months as he has been.
Also, the differences that persisted between McConnell and House Speaker Nancy Pelosi, D-Calif., in drafting a stimulus agreement “are still going to be there.” She would like a “close to $2 trillion” stimulus plan and McConnell would have “a very hard time getting more than $1 trillion from his own troops.”
A “key variable,” Valliere stated, will be Biden. “People close to him indicated over the weekend that they might get involved in the stimulus [talks] before the holidays. I think that would be very helpful.”
A “major issue to address” is the need to pass a continuing budget resolution, keeping the government open, as the current resolution expires on Dec. 11, Valliere added.
“It’s likely that still another CR will be required, lasting until just before Christmas, as usual,” Valliere said.
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