December Issues Update
When Joe Biden is sworn in as president Jan. 20, the really hard work begins as he endeavors to push an ambitious "Build Back Better" agenda amid a ranging coronavirus pandemic and economic upheaval.
He has urgent plans to restore the economy, fix-up the nation’s crumbling infrastructure and much more as fights the virus as a top priority.
It’ll be an uphill struggle, though, particularly with a closely divided Congress — no matter which party controls the Senate — and Donald Trump looming in the background after he leaves office.
Here’s a closer look from POLITICO Pro’s policy teams.
— The president-elect will have to trim his sails on taxes, without Democratic control of the Senate.
— Biden’s budget office nominee, Neera Tanden, faces a tough confirmation road in the Senate.
— Some Biden proposals may slip into an early economic stimulus package, including an ambitious climate plan, but others will end up on the back burner.
What to do about taxpayer-funded aid: A major question facing farmers and ranchers is whether the new administration will continue the extensive subsidies Trump has steered to the industry since 2018.
Government farm payments surged to a record high this year and now account for more than a third of the industry’s net earnings, which farm economists say is unsustainable. But Biden is sure to face pressure from commodity groups and farm-state lawmakers to extend the support programs. And those policies could influence key business plans like which crops to plant and whether to invest in new farm machinery.
Food assistance: Biden says he wants to expand benefits under the Supplemental Nutrition Assistance Program by 15 percent during the crisis, a policy that congressional Democrats have tried unsuccessfully to include in multiple economic rescue measures.
The new president can also backtrack on Trump’s regulatory efforts to trim participation in SNAP, including Agriculture Department proposals that haven’t been finalized. Boosting the safety net programs could help take pressure off hungry families as well as the food banks and nonprofits facing heavy demand for food.
Regulatory tightening: There’s bipartisan momentum for cracking down on consolidation in agriculture, especially in the meatpacking sector, and Biden advisers have said antitrust efforts will be part of his economic agenda.
His EPA could also take a stricter tack on pesticides and other environmental issues that affect farmers and agribusinesses. — Ryan McCrimmon
Biden faces pressure to drop tariffs: American businesses stung by Trump’s trade wars are already pressing the incoming Biden administration to ease tensions with allies and adversaries alike.
This month, IBM called for Biden to remove some of the $350 billion in tariffs Trump imposed on China aimed at goods used in advanced manufacturing. The Business Roundtable also said Biden should unwind "some of the very damaging tariffs" that Trump put in place on China, provided that Beijing gave similar relief.
Still, those talks will take a lower priority to domestic stimulus. Once that’s done, Biden said his goal would be to "pursue trade policies that actually produce progress on China’s abusive practices — that’s stealing intellectual property, dumping products, illegal subsidies to corporations," the president-elect said in a recent interview with The New York Times.
Confronting China: Those aims are similar to what Trump wanted to achieve in the next set of negotiations with China, which have been stalled. Biden’s camp is betting that bringing the European Union and other allies to the table will help challenge the world’s No. 2 economy.
EU leaders say they are eager to gang up on Beijing, with some calling for a new "Transatlantic Trade and Technology Council" to combat China’s development of 5G, artificial intelligence and other technologies.
But cooperation could be complicated by deep differences among the allies on digital tax proposals from EU nations and tariffs Trump imposed on European consumer goods — duties Biden will likely only lift with reciprocal action.
For now, the transition team is mum on how it will approach those issues, or if it will continue ongoing trade talks with other nations, including the U.K. and Kenya. — Gavin Bade
Biden’s ambitious tax plans in doubt: Without Democratic control of the Senate — to be determined in the two Jan. 5 runoff elections in Georgia — Biden's ambitious tax plans, including a range of tax increases on corporations and wealthy individuals, would be crippled.
Still some elements of the new Democratic president’s plans could draw bipartisan support, such as using incentives to lure overseas jobs back to the U.S. and expanding a range of tax credits for lower-income Americans. If there’s more coronavirus relief, tax breaks for struggling businesses are another possible area of compromise.
Biden will also have to confront a simmering international tax dispute. Talks to reach a global agreement on digital services taxes, which would hit U.S. tech giants, are bogged down largely because of conditions demanded by the Trump administration.
So, France and some other countries are moving forward with their own taxes, at least until a consensus is reached. And that could trigger U.S. sanctions in the waning days of Trump’s tenure.
European leaders have expressed hope they’ll have an easier time working with the new Biden administration. But Democrats in Congress have been united with Republicans in criticizing taxes that would largely hit U.S. companies, and it’s not clear yet what approach Biden will take to the talks. — Toby Eckert
BUDGET AND APPROPRIATIONS
Biden’s "radioactive" budget nominee: It’s already clear that Biden’s choice to run the White House Office of Management and Budget, Center for American Progress President Neera Tanden, will face tough sledding on the road to confirmation if Democrats don’t regain control of the Senate in the two Jan. 5 runoffs in Georgia.
Republicans are dredging up Tanden’s pointed criticism of the party on Twitter, saying her partisanship is disqualifying. But Democrats contest that Republicans should look inward if they’re bothered about tweeting, stressing that Tanden is supremely qualified for the job.
Indeed, if Tanden is confirmed, she would bring a broad base of policy knowledge and effective communications skills to an agency that will be central to all the ambitious plans proposed by the new Biden administration. And Democrats appreciate that Tanden relied on public assistance programs when growing up, giving her a deep understanding of OMB’s mission.
Sean McElwee, a progressive activist and founder of the liberal think tank Data for Progress, said Tanden has embraced progressive ideas like paid leave and hasn’t "bought into the type of beltway deficit thinking that would harm" the economic recovery from the coronavirus pandemic. — Caitlin Emma
Fannie-Freddie’s-fate: A top housing regulator is working hard to advance plans to release Fannie Mae and Freddie Mac — the two companies that stand behind half the nation’s $11 trillion mortgage market — from government control before the Biden administration takes over.
Federal Housing Finance Agency Director Mark Calabria and Treasury Secretary Steven Mnuchin are seeking to alter the terms of the legal agreement governing Fannie and Freddie, which determines the level of capital that the companies are allowed to keep and the government’s stakes in them. The move would speed up the effort to free the mortgage giants from government conservatorship, a goal Calabria has doggedly pursued since taking office in April 2019.
But Democrats — worried that the newly private companies would focus less on affordable housing — are leery of plans to free them. And Biden is expected to pump the brakes on Calabria’s plan, setting up a potential clash between the new administration and the FHFA director, whose term is set to expire in April 2024.
Fannie and Freddie were saved from collapse by the federal government in September 2008 amid the housing crisis.
Fair-housing: Biden has pledged to restore an Obama-era fair housing rule that would require local governments to actively track and address patterns of segregation or lose federal housing funds. After delaying and proposing revisions to the 2015 Housing and Urban Development rule, the Trump administration scrapped it in July.
The incoming administration also wants to restore HUD’s so-called disparate impact rule of 2013, which holds governments and businesses accountable for policies that have a discriminatory effect, even when none is intended. A federal judge in October issued a preliminary injunction to stop the agency from implementing the Trump administration’s new version of the rule, which would have required plaintiffs to meet a higher threshold to prove unintentional discrimination and given defendants more leeway to rebut the claims.