What investors can expect during Biden's first 100 days as President

Eurasia Group US Managing Director Jon Lieber joined Yahoo Finance Live to break down what Americans can expect President Joe Biden to accomplish in his first 100 days in office.

Video Transcript

SEANA SMITH: Stick with this with Joe Biden taking office as the 46th president of the United States and bring in Jon Lieber. He's Eurasia Group's US managing director. And Jon, great to have you back on the show. Joe Biden, like Jess just was just telling us, making this case, making the call for unity. We were expecting to hear that today in his inaugural address.

But I guess the question, then, is at this point, he clearly has a very tough job ahead of him. He knows he's inheriting a struggling economy. What do you think Biden needs to do to get off to a successful and off to an effective start?

JON LIEBER: Thank you. You know, I think Biden's speech was good, fine. Everything was great, and the calls for unity are wonderful and important. And this is obviously a very divided time in the United States. But the fundamental story of politics in the US right now is deep political polarization, where the two sides are just representing different groups of people from different parts of the country. So to bridge the gaps and bring people together on commonly agreed upon policy I think is going to be really, really, really hard.

So one of the first decisions that Joe Biden is going to have to make in his presidency is, does he govern by trying to reach out and find 10 Senate Republicans who want to support his fiscal stimulus plan, or does he say, you know, forget all that. We have the power, we have the momentum, and we have the votes. Let's do something really, really big here that's going to really supercharge the economy.

My guess is he does the latter. And, you know, that's going to be-- it won't be easy, and it'll present its own set of challenges. But finding those 10 Senate Republican votes is going to be really hard for him, especially when he's putting out a $1.9 trillion stimulus bill.

ZACK GUZMAN: Yeah, and it didn't take long for Senator Mitt Romney there to pour some cold water on that, talking to floor reporters saying that we just passed a program with over $900 billion in it. He expressed that he's not looking for a new program in the immediate future. So obviously, he's a key voice within the moderate Republicans in the Senate there. So how much cold water does that take, maybe pour, on the idea that Biden is going to be able to get what you're talking about there, that bipartisan support?

JON LIEBER: Yeah, I'm really skeptical. I mean, I could see one or maybe two senators, Lisa Murkowski from Alaska, Susan Collins from Maine, both of whom, you know-- Murkowski is already running one as an independent there, although she still is a Republican and works with the Republicans. Collins kind of beat the odds in the last cycle and defeated her Democratic opponent by almost 10 points and is sort of free to chart her own path. And I think those two are potentially gettable votes for a very large fiscal stimulus deal.

But you look at what Romney's saying, and you kind of go down the list of Republican senators. And it just doesn't look like there's a huge appetite there for borrowing. And Biden said he wants to borrow. Yellen said it yesterday in her testimony. This is the time to rack up some debt, get the economy moving, and they can do that with only Democratic votes.

SEANA SMITH: Jon, if we don't get that $1.9 trillion package that Biden has put forward, what do you think the economy needs, just to get back on track at this point?

JON LIEBER: You know, like Romney said, Congress just passed $900 billion. That's obviously not going to be enough to fill the gap that's expected due to the coronavirus. I think one of the big unknowns in the coming year is how long you're going to see local restrictions on activity and restaurants and bars closed down and, you know, music venues shut down and people stuck at home. And if that goes on into the spring or fall-- spring or summer, you're going to need more money than what they just did.

One of the really key deadlines is March 14, which is when the extended unemployment benefits that have been offered by the federal government expire. And I think that's going to be an action forcing event. Because if you don't extend that, then you see a lot of people collecting unemployment kicked off and losing their income.

The other thing that I think is going to drive a bill is state and local government finances. And you're already seeing them lay off some workers. They'll have to start-- they may have to start cutting back on essential services later in the year if there's not federal relief money, which I anticipate there will be.

ZACK GUZMAN: Yeah, that had always been kind of the sticking point in earlier negotiations, that state and local aid. One of the flip side arguments here would be that there is an issue that it seemed that, you know, President Trump was on board with, even some Republicans and Marco Rubio being another key voice there, which would be the additional payment for Americans in stimulus checks.

I mean, is there maybe a possibility where you see Democrats concede on this message of unity here, concede on some of the other things that they were talking about in those earlier proposals, including a $15 minimum wage at a federal level here, to just say, all right, let's get some momentum and bipartisanship to just get through those stimulus checks. And if so, might that be enough here to maybe see another boost, more momentum in the market?

JON LIEBER: It's possible. And I mean, I think those $1,400 checks would be a huge boost to personal income. I mean, you could look back at April when the government did $1,200 checks. That was the single biggest monthly growth in personal income in American history that led to a spike in savings rates that was then spent down over the subsequent months. So a new round of stimulus checks like that would probably have a similar effect.

But it wouldn't solve the problem of people who don't have jobs right now not having any income. That's why you need unemployment insurance. And it also wouldn't solve the problem of the state and local governments who are running out of cash being able to keep operations going.

So I think those two things will basically have to be a part of any deal. And the stimulus checks may bring along some Republicans. But they're really expensive, they're poorly targeted. And I don't think that's going to be enough to get you the 60 votes you need to get something over the finish line.

SEANA SMITH: Jon, we only have about 30 seconds left here. But real quick, what would you say is the future of the Republican Party? Because I think that's a big question at this point when there's such a divide within the GOP itself. How do they move on?

JON LIEBER: Yeah, I mean, I think that's really up to President Trump. And obviously, a lot of elected Republican officials would just as soon be done with him and have him out of the party. But a lot of folks rely on his base of voters. And even if he's not uniquely powerful in the party anymore, that base of Trump voters are going to play in Republican primaries. And they're going to continue to be a force in politics. So I think that could create a problem for Republicans at the statewide level in Senate elections in 2022.

SEANA SMITH: All right, Jon Lieber, Eurasia Group's US managing director, always great to talk to you. Thanks for taking the time.

JON LIEBER: Thank you.