Even With $900 Billion Stimulus, Biden Faces Fragile Economy

With his presidential inauguration just weeks away, Joseph R. Biden Jr. is confronting an economic crisis that is utterly unparalleled and yet eerily familiar.

Millions of Americans are out of work, small businesses are struggling to survive, hunger is rampant, and people across the country fear getting kicked out of their homes. The moment was similarly perilous exactly 12 years ago, when Mr. Biden was the vice president-elect and preparing to take office.

“I remember the utter terror,” said Cecilia Rouse, who was an economic adviser in the Obama White House and has been chosen to lead Mr. Biden’s Council of Economic Advisers.

The $900 billion pandemic relief plan that moderate lawmakers powered through Congress last month provides the incoming administration with some breathing room. This second tier of aid will deliver $600 stimulus checks, assist small businesses and extend federal unemployment benefits through mid-March.

Instead of hurtling down a hole with no clear view of the bottom, Mr. Biden is taking office when the economy is on an upward trajectory. However anemic the growth, most analysts predict that 2021 will end better than it began even if there are stumbles along the way.

While this pandemic-related recession was larger in terms of initial job losses and closures, it is collateral damage from a health emergency and not a crack in the global financial system.

Now, Ms. Rouse said, “we know what to do.”

Mitch McConnell of Kentucky, the Republicans’ leader in the Senate, was often intent on blocking Mr. Obama’s agenda, but his party was in the minority.

Mr. Biden must deal with a much more bitterly polarized Congress, which could still have Mr. McConnell as the Senate majority leader. Enacted after six months of stalemate, the $900 billion pandemic package will help households and businesses get through the next few months.

But the Biden administration will have an uphill slog persuading lawmakers to approve more aid when this round ends. Mr. Biden will face resistance from some Republicans who put aside their concerns about debt when it came to cutting taxes in 2017 but who have rediscovered their inner deficit hawk.

Mr. McConnell has already pushed back against President Trump’s — and Democrats’ — repeated calls for increasing the stimulus checks to $2,000 from $600.

The failure to extend or expand federal aid when it expires this spring not only would cause significant hardships and needless suffering but could seriously scar the economy, said Joseph Stiglitz, a Nobel Prize-winning economist.

Even though economic activity will most likely be on an upswing, the economy will remain weakened, Mr. Stiglitz said. Eviction moratoriums and mortgage forbearance have prevented families from losing their homes, but their housing debt has been accumulating even if it has not yet shown up on household balance sheets.

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