While the COVID-19 pandemic and its economic impact present the most pressing challenges, Democratic control of Congress and the White House could also spur action on issues ranging from climate change to scrutiny of private equity practices.
President Joe Biden has already unveiled a $1.9 trillion emergency rescue plan focused on delivering financial aid directly to individuals and businesses, plus enhanced testing and vaccination, to boost the economy and jobs. Later this year, Mr. Biden will lay out a plan for a longer-term economic recovery package that is expected to address infrastructure, green energy and other job-creating initiatives.
Paying for these bold actions could revive talk of tax increases for corporations and high-income earners. "Later this decade, if interest costs on the national debt start to become unmanageable, higher taxes may be inevitable," said David Kelly, chief global strategist for J.P. Morgan Asset Management in New York.
During her Jan. 19 confirmation hearing before the Senate Finance Committee to serve as Treasury secretary, Janet Yellen said that she and Mr. Biden are mindful of the country's debt burden, "but right now, with interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time."