by Greg Valliere, AGF Management Ltd.
IT’S A TOUGH JOB: It strikes us that Joe Biden faces far more immediate problems than most incoming presidents. Here’s our list of the Top Ten crises he faces:
1. Hospitalizations have fallen in the past week, as have new COVID cases. But fatalities will hit 400,000 today and will exceed half a million by spring, as a mutant variant rages. Biden will emphasize masks, but the real issue he needs to address is the inept rollout of vaccines.
2. Thousands of immigrants are marching north in Central America; what to do with them may give Biden his first crisis — and Republicans their first major issue in the Biden era.
3. North Korea displayed huge new missiles in a military parade this past weekend; the Kim government undoubtedly will test them in the next few months, eager to jump-start negotiations with the U.S. that could ease economic sanctions, Kim hopes.
4. Relations between the U.S. and China will stay frosty until Washington reaches a consensus with allies on an approach to Beijing. Same with Iran, where radical ayatollahs are reluctant to negotiate.
5. Friction looms with Wall Street — The nominations of Gary Gensler to head the SEC and Rohit Chopra to head the Consumer Protection Financial Bureau pleased progressives — and signaled that Wall Street will be aggressively regulated.
6. There will be tremendous friction with the fossil fuels industry. Biden will re-join the Paris Climate Accord tomorrow, and his cancellation of the Keystone Pipeline shouldn’t come as a surprise — he’s been promising to do that for the past year. Biden wants to phase out fossil fuels, and the industry will fight him furiously.
7. The budget deficit will exceed $3 trillion this year, and total U.S. debt should exceed $30 trillion by the middle of this decade. Janet Yellen knows the economy will need much more medicine — but that could push yields higher and produce a whiff of inflation.
8. Republicans and moderate Democrats, citing deficits, will balk at Biden’s first pandemic relief bill; we wrote last Friday that Biden might get no more than $1.5 trillion of his $1.9 trillion package. A second bill — even more expensive — could face a long slog.
9. Unity will prove elusive. Even among Democrats, unity will begin to unravel, with progressives pushing Biden hard to pass major tax increases and new spending. The left wanted an impeachment trial, and now it’s coming — a great distraction for Biden and his agenda.
10. Bringing the country together. Perhaps Biden’s greatest crisis will be the volatile electorate; an astonishing one-third of Americans think there was election fraud, and only 21 percent of Republicans think the election was legitimate. But there will be charges brought against the Capitol rioters, as well as Trump aides — and perhaps Trump himself. This will be a tremendously divisive issue.
YES, IT’S A VERY TOUGH JOB: Biden is a skilled negotiator with a solid Cabinet, but these crises will confront him immediately; how many can he juggle at once? He will need to spend his political capital very carefully — because the wounds from the past four years will not heal quickly.
