“The greatest gift you can give your children are the roots of responsibility and the wings of independence.” ~ Denis Waitley, American Writer & Consultant
On January 20, 2021, President Biden was sworn in as the 46th President of the United States in an uneventful transfer of power. Shortly after taking office, his administration advanced executive actions on a wide range of issues. Short-term focus is expected to be on agenda items considered as positive forces for the economy and market including Biden’s COVID response, an “act big” approach to stimulus with as much as $4 trillion in infrastructure spending, and immigration reform. Much of the agenda will likely take longer than expected to materialize. Longer-term, the market impact is expected to be driven by legislative battles, the COVID recovery, and any action by the Biden Administration to implement tax increases to pay for these priorities.
Stimulus Update: Recent developments include the potential for the House to immediately consider a bill to increase the individual checks by $1,400 and provide quick cash for vaccine distribution to notch an immediate legislative victory, then wait to negotiate the larger package with March increasingly looking like the earliest potential timeline.
Vaccine distribution is one topic that could unify members of Congress. The push for checks would have to clear the Senate, where there have been mixed signals. Democrat Senator Joe Manchin of West Virginia previously downplayed his support for checks, signaling that his opposition is not firm and would rather any additional aid be more targeted. He also suggested going big on infrastructure with $4 trillion in spending over the next ten years. In contrast, Republican Mitt Romney of Utah was less committed to the idea of additional stimulus (he wanted to keep the last package below $1 trillion), saying that he is “not looking” for a new package.
One of the executive orders continues forbearance on federal student lending through September 30 and will continue to add to the spending power of the estimated 22 million borrowers impacted by the order, promoting consumer spending among college graduates. Reports indicate that Biden is considering a reduction of $10,000 per borrower. The Biden Administration also extended the federal eviction moratorium through March.
Some are pushing for the administration to expedite the push for infrastructure spending to quickly maximize economic impact. Budget reconciliation allowing revenue changes with a simple majority vote would be the tool that could deliver a large-scale infrastructure package with tax increases later this year.
How will the spending be paid for? Revenue sources will be a significant obstacle for Biden’s domestic agenda as Janet Yellen’s testimony pointed to tax changes on corporations and wealthy individuals as potential targets, with significant resistance from Republicans.
Biden’s first executive actions include mandating masks on federal properties to slow the spread of COVID-19, rejoining the Paris Climate agreement to get a handle on climate change, and reversing key Trump regulations and freezing those that are new or pending. This includes stopping the construction on the southern border wall and ending the 2017 “Muslim travel ban“ immigration restrictions placed on predominantly Muslim countries (for example including Syria, Iran, Iraq, and Libya).
COVID-19 responses include the “100 Days Masking Challenge” with an Executive order to require wearing of masks on federal properties, in federal buildings, and among federal employees and contractors. Biden also implemented a “response coordinator,” Jeff Zients, to keep track of vaccinations, testing, and equipment needs and relay information to the President. Biden rescinded the Trump Administration’s withdrawal from the World Health Organization and intends to reposition the U.S. as a top member of the global health organization with Dr. Anthony Fauci heading this effort.
Biden reestablished the United States membership among the Paris Climate Agreement, an action that will take 30 days to take effect. He ended the Keystone XL pipeline and revoked oil and gas development at national wildlife monuments. In addition, Biden reversed President Trump’s July 2020 order so that undocumented Americans will be included in the census. These are just the top featured events from the first few days with the new administration. More will be revealed. Stay focused and plan accordingly.
All references to President Joe Biden’s inaugural address and executive orders are provided by The Associated Press. There is no assurance that any investment strategy will be successful. The opinions expressed are those of the writer as of January 21, 2021, but not necessarily those of Raymond James and Associates, and subject to change at any time. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance does not guarantee future results. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
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This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at (239)389-1041, email firstname.lastname@example.org. Website: www.raymondjames.com/Darcie.