Joe Biden Becomes the 46th U.S. President
On January 20, Joseph R. Biden will be sworn in as the 46th President of the United States of America. Earlier this week, confirmation hearings began for Biden’s cabinet picks. One of those picks was former Fed Chair Janet Yellen, Biden’s Treasury Secretary nominee.
Signs of optimism were evident as U.S. stocks rose a bit on Tuesday as investors waited to hear what the Treasury Secretary nominee would say during her hearing. People expected Yellen to urge Congress to “act big” on stimulus. Biden has already pledged $1.9 trillion in stimulus, which Yellen agrees with and emphasized during her confirmation hearing. With interest rates at historic lows, she has remarked that the smartest thing we can do would be to act big, especially with interest rates so low.
On Tuesday, she testified that the U.S. could afford a higher corporate tax rate if the country coordinates with other economies around the world. In response to a question from Senator Mike Crapo, R-Idaho, she said:
We look forward to actively working with other countries through the [Organization for Economic Cooperation and Development] negotiations on taxes on multinational corporations to try to stop what has been a destructive, global race to the bottom on corporate taxation. In that context, we would assure the competitiveness of American corporations even with a somewhat higher corporate tax.
However, she cautioned that these kinds of measures could only be beneficial after the U.S. overcomes the coronavirus. She said this of Biden’s plans:
[Biden] has said that eventually, as part of a larger package that would include significant spending and investment proposals — not now while the pandemic is really depressing the economy — that he would want to repeal parts of the 2017 tax cuts that benefited the highest-income Americans and large companies. He wants to reverse the law’s incentives to offshore operations and profits. But he has been very clear that he does not support a complete repeal of the 2017 tax law.
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During her hearing, Yellen also promised lawmakers that she plans to prioritize everyday workers and make sure that the U.S. can offer well-paying jobs to workers in cities and rural areas — something I believe most U.S. citizens can relate to. Often, all sides feel as if they are being left out of the discussion of potential jobs and their well-being. People are tired of struggling and working to barely make ends meet. Yellen told the Senate Finance Committee:
I will be focused on day one on providing support to America’s workers and to small businesses, putting into effect as quickly and efficiently as I can, the relief in the bill that was recently passed, and then over time working for a second package that I think we need to get through these dark times.
The American people and small businesses have been deeply impacted by the coronavirus pandemic, and the economy reflects the hardships of Americans and what small businesses have endured since last spring. However, people are hoping the incoming administration will get the country back on the path to where it needs to be and put it in a position of strong growth. Biden (and the country) hope the professionals and experts in his cabinet will do just that.
According to CFRA’s Sam Stovall, the S&P 500 gained about 11.8% in price from Election Day on November 3, 2020, through January 15, 2021. It is now on track to become the best Election to Inauguration Day return for a first-term president since WWII. Biden and his administration will have a lot to put into action, especially in his first 100 days in office. We’ll get a better idea of what this administration has to offer in the upcoming months.
Until next time,
