Breakingviews - Joe Biden has edge in assembling economic talent

  • 9/22/2020
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SAN FRANCISCO (Reuters Breakingviews) - Whoever wins the U.S. presidential election in November will face unprecedented challenges. The Federal Reserve expects a slow recovery after the pandemic-induced setback. The new boss will need a team of experienced aides providing sound advice to help him nurse the economy back to health. Joe Biden, the Democrat and former vice president, may have an advantage over Donald Trump in the war for talent, Breakingviews’s latest edition of the Economic Dream Team Machine shows. (Click here to build your teams: tmsnrt.rs/2Rf8mol) Covid-19 upended an economy that had seen the unemployment rate at a 50-year low before March. The jobless pace in August was 8.4%, compared to 3.5% in February. As of Aug. 22, nearly 30 million people were receiving federal unemployment assistance, compared to 1.6 million a year ago, according to the Department of Labor. Last week, the Fed projected an unemployment rate of 5.5% in 2021 and expects to keep interest rates near zero through 2023 to contain the economic fallout. There’s also a slew of international challenges, chiefly deteriorating relations with China. While trade tensions have cooled, other flash points have erupted. In August, the top U.S. diplomat Mike Pompeo outlined the “Clean Network” push to rid America’s internet of Chinese tech. For the first time, Uncle Sam imposed export restrictions on 24 Chinese companies because of their alleged help in expanding the People’s Republic’s presence in the South China Sea. Trump won’t have as many A-list choices to help him if he wins re-election. He’s on his fourth chief of staff and many aides with him in the beginning of his term, like former Goldman Sachs President Gary Cohn, who became director of the National Economic Council before resigning in 2018, are long gone. Currently, there is only one person on the three-panel Council of Economic Advisers. One of the rare steady presences, Treasury Secretary Steven Mnuchin, has said he would serve in a second term. As he did during his first term, Trump might turn to Wall Streeters and business executives outside of the Washington bubble. The president gave shout-outs to hedge fund bosses Ken Griffin of Citadel and Nelson Peltz of Trian Fund Management during the signing ceremony for a trade deal with China. He’s also even more enamored with TV personalities, like Fox’s Lou Dobbs. It’s not inconceivable some of them may make an appearance in a second term. Biden has the opposite problem with almost too many choices. There’s a host of former presidential primary rivals, from Senator Elizabeth Warren to entrepreneur Andrew Yang, who could land senior roles in government. Warren is a potential Treasury secretary candidate if her Massachusetts seat isn’t needed to snag a Democratic majority in the Senate. Biden also has a host of finance and business bosses that are keen to help him give the economy a booster shot, such as BlackRock’s Larry Fink and Blackstone Executive Vice Chairman Tony James. Evercore Chairman Roger Altman and Centerbridge’s Mark Gallogly have also raised lots of money for Biden. But progressives in the Democratic Party are pushing to sideline cabinet candidates with a Wall Street background or centrist views. It has caused the Biden campaign to already downplay former Treasury Secretary Larry Summers’s role as an adviser. A pick like Fink, whose firm has numerous business relationships with the government, would also likely draw opposition from the liberal wing. Given Biden’s track record of working with Republicans, he may also be able to count on some potential crossover picks. Fed Chair Jerome Powell had been Trump’s punching bag for years until the central bank began cutting interest rates in the wake of the pandemic. With the economy still in need of assistance, a President Biden might prefer continuity at the Fed and reappoint Powell, whose four-year term ends in 2022. Several Republicans, like former Ohio Governor John Kasich, could also wind up in a Democratic administration. As it has been done for the past few presidential elections, Breakingviews has assembled the Economic Dream Team Machine to give readers a tool to help them consider the daunting challenges the next president faces. You can pick from an experienced group of potential contenders for senior posts in either candidate’s administration, such as Treasury secretary and Fed chair. There’s also a “wild card” position for extra points, such as chair of the Securities and Exchange Commission or a climate change czar. The next American president will preside over an increasingly polarized country that is divided on issues of racial injustice and income inequality, which have been exacerbated by the pandemic. With the right team behind him, a revived economy can play a role in healing divisions.

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