Can team Biden prevent a recession?

The Covid-19 relief legislation Congress passed on Monday postpones—but doesn’t resolve—two questions, which the new Congress and the Biden administration will face early in 2021: How much should the federal government spend to mitigate the suffering Covid-19 has produced? And what must be done to avoid a double-dip recession and promote economic recovery?

The economy and society can’t return to normal until the pandemic recedes. This will take time, even with the development and approval of two new vaccines at a record pace. America is unlikely to reach the necessary level of immunization until summer at the earliest.

Also Read | How hunger came back to haunt India

Meanwhile, states and localities are coping with record levels of infections and hospitalizations. Many are reimposing the restrictions they relaxed during the summer, dealing a new blow to entire industries. Restaurants are closing, travel is declining, and applications for unemployment insurance are on the rise again. After flattening in October, retail sales fell by 1.1% last month. The pace of job growth has declined for five straight months and may have ceased in December. Many families are facing hunger and eviction.

The new relief bill addresses the most urgent problems. Federal unemployment benefits have been extended until March 14, at a reduced but still significant level of $300 a week. In addition, individuals with less than $75,000 in annual income and couples making less than $150,000 will receive checks of $600 a person. Families with two children can receive up to $2,400.

Businesses will get help, mainly through the Paycheck Protection Program, which has been extended at a cost of $285 billion. New restrictions will ensure that payments go to small businesses as intended, and the program’s benefits will receive more-favorable tax treatment. Airlines will receive another round of help to limit layoffs.

The bill contains help for the hardest-hit families, including a $13 billion expansion of nutrition assistance and $25 billion in rental relief. A moratorium on evictions will be extended, but only until Jan. 31.

Despite the efforts of governors, mayors and county executives, states and localities didn’t receive the funding they requested. Still, they didn’t come away empty-handed. Schools will get additional help, as will the transit systems on which many essential workers depend to get to their jobs. State and local health agencies will receive aid for testing, contact tracing and vaccine distribution. And the deadline for spending funds appropriated under the Cares Act passed in March was extended a year, to the end of 2021. States can keep tens of billions of dollars they would otherwise have forfeited on Dec. 30.

Yet the eviction crisis will not end by Jan. 31, and the level of long-term unemployment will still be very high in March. No doubt the Biden administration will seek to extend—and perhaps expand—federal assistance in these areas. We’ll see how Senate Republicans will respond.

But the country cannot afford another slow recovery from a deep recession. This is not an ordinary downturn. The pandemic has accelerated structural changes long in the making. Online businesses have prospered while bricks-and-mortar establishments have disappeared. Educated workers have been sheltered from the worst effects of the pandemic while those without degrees have struggled. Economic gaps have expanded between white Americans and other groups. Minorities have also suffered disproportionate hospitalizations and deaths from Covid-19.

The Biden administration must respond with a program that seeks to accelerate economic growth, provide new opportunities for the victims of economic change, and narrow the gaps that the pandemic has widened.

In a closely divided Congress, these measures will need bipartisan support. This will not be easy, because the political parties have different views about the appropriate role of the federal government in the economy. But most people should agree that a high rate of participation in the labor force is good for everyone. If displaced workers stay stuck on the sidelines, everyone will be worse off. The same is true if women retreat from the labor force because their families can’t afford child care. Americans can also agree that the higher the share of workers who earn enough to support themselves and their families, the lower the burden will be on government and private philanthropy. Similarly, helping formerly incarcerated felons re-enter the workforce will rebuild stronger families and communities as well as local economies.

An economic program built on common ground across partisan and ideological lines would serve the needs of the American people. As important, it would help heal the divisions that have disfigured American politics.

This story has been published from a wire agency feed without modifications to the text