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For a Strong Start, Biden Needs a Smooth Transition

Mohamed A. El-Erian
·4 min read

(Bloomberg Opinion) -- President-elect Joe Biden is preparing to lead the U.S. at an increasingly troubling time. Americans face a host of challenges, from surging Covid-19 infections and slowing economic growth to worsening inequality and deep political and social divisions. The Biden administration will be under pressure from Day One and would have a better chance at getting off to a strong start if it were afforded a smooth transition. Biden and his team will need to be able to take quick actions, and it would greatly help if they were taken with as full an information set as possible.

Biden made it clear in his victory speech on Saturday evening that he is wasting no time in getting ready for the White House, especially when it comes to containing the pandemic. On Monday, he plans to appoint a 12-member task force that will work to create policies for dealing with Covid-19 that could start as soon as he is sworn in on Jan. 20. He is right to make the pandemic his first priority. Daily coronavirus cases have surged past 100,000, suggesting that the U.S. is following the type of path that has forced most of Europe to reimpose various forms of lockdowns in the face of increasingly strained healthcare systems. But that’s only one of the many challenges he must deal with quickly.

Even before any new renewed Covid-19 restrictions, U.S. economic data has continued to point to a deceleration. The inequality trifecta – of income, wealth and opportunity – is also worsening, adding to social tensions and an erosion in the country’s longer-term growth and prosperity potential. And the Congressional elections have done little to overcome deep political divisions that were aggravated by the recent disagreements over the nomination and approval of a new Supreme Court justice.

Having united the Democratic party, President-elect Biden now has work to do in dealing with a likely divided Congress and bringing together the American people as a whole. His Congressional challenge involves quickly securing the support of enough lawmakers to pass a fiscal package that goes beyond the important objective of helping with Covid-19 relief. It should also be directed at improving the country’s ability to live with the virus in a healthier and economically-less disruptive manner, and at countering downward pressure on longer-term productivity and household economic security. Biden also needs to get enough of the country behind him in the collective fight against Covid-19 or risk the loss of more lives, greater disruptions to livelihoods, and longer-term economic, institutional and social scarring.

Biden’s ability to do these things depends in part on how well the transfer of power takes place in the next few weeks. The experience of the last two transitions points both to the opportunities and challenges.

In November 2008, President-elect Barack Obama benefited from the cooperation of the Bush administration as he prepared to take over in the middle of the global financial crisis. Without the intense briefings that took place with then-current White House staff, it would have been very hard for the Obama team to prepare for the series of domestic measures and international interactions that proved essential to avoid a potentially devastating economic depression. It also allowed the Obama administration to hold on to some Bush officials for at least a few months to gain from their expertise.

The experience eight years later was less encouraging. While both the Obama administration and the incoming Trump administration blamed each other for the messy 2016 transition, their interaction was not conducive to a smooth transfer of power. And there was little appetite for any carryover in officials, even for the very short term. Fortunately, there was less at stake then, with the economy on the mend and the pandemic only a hypothetical (a remote or tail event). Not so today.

Many expect the 2020 presidential transition to be a repeat of 2016 rather than 2008. That would be unfortunate for America, with significant potential consequences in terms of lives and livelihoods. It is also avoidable.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE, the parent company of Pimco where he served as CEO and co-CIO; and chair of Gramercy Fund Management. His books include "The Only Game in Town" and "When Markets Collide."

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