China has started a world war. What will be the future of America under the Biden administration?

 
Many media outlets are joyful and optimistic about Mr. Biden’s victory, not realizing that China has triggered a world war. Even as a U.S. administration under Biden is born, what awaits the new administration is the heavy burden of addressing the coronavirus recession.

Mr. Biden is portraying himself as President Franklin D. Roosevelt (1933-1945), who fought the Great Depression in 1939, in an attempt to overcome today’s recession. Mr. Biden made the following speech when he formally accepted the Democratic Party’s nomination for president in August 2020:

“Nearly a century ago, Franklin Roosevelt pledged a New Deal in a time of massive unemployment, uncertainty, and fear. Stricken by disease, stricken by a virus, FDR insisted that he would recover and prevail, and he believed America could as well. And he did. And so can we.”

The Roosevelt administration sought to rebuild the U.S. economy through its New Deal program and implementation of a wealth tax which were centered around active public works projects and relief for the vulnerable. As if to follow in FDR’s footsteps, Mr. Biden is proposing large-scale investments of 2.4 trillion dollars into clean energy, as well as tax increases on wealthy people and large corporations.

Building a Mountain of Unemployment

Did FDR’s policy go well? We’ll start with the quick conclusion: It was a big mistake.

As outlined in the October 2020 edition of the Liberty, the Great Depression was triggered by tax increases under the Hoover administration (1929-1933). Later on, the Roosevelt administration inherited a poor economy; the new administration introduced a wealth tax to match the public opinion at the time and raised the highest income tax rate. Thus, during the 1930s, the real GDP of the U.S. declined by 50% in just four years.

The unemployment rate remained high at 10% or above as a result of a series of tax increases, and the U.S. administration hoped for an economic recovery arising from war demand — it is fair to say that one reason for the U.S.’ participation in World War II was to recover its economy.

Mr. Biden may also follow FDR’s footsteps and, after taking over the pandemic recession from the Trump administration, increase taxes on the wealthy and flood the city with a large number of unemployed people. Even if the administration invests in climate change measures, the unemployment rate will not improve because the investment effect on clean energy has limitations.

Lockdown Recessions

The whereabouts of the Biden administration will be influenced by the two run-off elections for the U.S. Senate in January 2021. Unless the Democratic Party regains both seats, the Democrats will not have a majority in the Senate. Essentially, the Biden administration cannot pass major policies without the cooperation of the Republican Party. Thus, some people believe that tax increases, of which the Republicans are reluctant, won’t be passed.

However, that’s not the case with Biden’s medical advisor’s long-held plan of locking down specific cities.

Due to lockdowns that took place between April and June 2020, the U.S. GDP fell to a negative rate of approximately 33% on an annualized basis. This economic loss is comparable to that of the Great Depression. A “Great Depression of the 21st Century” may occur, not only as a result of tax increases, but also from lockdowns.

Even the Republicans won’t be able to push through with oppositions if the unemployment number increases. They will then have to agree with Mr. Biden’s fiscal policy. If the Democrats are somehow able to plant a rebel in the Republican Party, it will become possible to raise taxes on corporations and the wealthy.

Mr. Biden could cross a dangerous bridge that will worsen the coronavirus recession into an economic depression, expand governmental authority, and completely destroy the U.S. economy — the scenario that China has been waiting for all along.