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INVESTMENT STRATEGY QUARTERLY

The Longer-Term Market Impact of the

Biden Agenda: A Preview of a New Economy?

Ed Mills, Managing Director, Washington Policy Analyst, Equity Research

The early theme of the Biden presidency is domestic which will be directly deposited into bank accounts this year.
policy, working with Congressional Democratic majori- This comes from adding the individual check received in Jan-
uary with the $1,400 per individual check in the latest round, for
ties in the House and Senate to ‘act fast’ and ‘go big’ on
a total of $8,000 per household (subject to the income limita-
COVID-19 relief efforts with the first legislative priority tions of the bill). The expanded child tax credit would provide
being the $1.9 trillion fiscal relief package. The American $3,000 per child aged 0-6 and $3,600 per child aged 6-17 (up
Rescue Plan Act of 2021 (American Rescue Plan) includes from a $2,000 tax credit currently). The big change with this
program is monthly deposits of either $250 or $300 per child
$400 billion in direct response to COVID-19 (vaccine dis-
from July through December. For a family of four, this adds
tribution, testing, personal protective equipment (PPE), $6,000-$7,200 to the $8,000 received via stimulus checks.
and school reopening); $1 trillion in relief to families and Beyond the stimulus checks and child tax credit, overall eco-
individuals (another round of stimulus checks, enhanced nomic support is higher for households with an unemployed
child tax credits, and unemployment benefits); and $440 worker ($300 weekly), individuals with federal student loans
(automatic forbearance through September), and households
billion for communities and businesses (state and local
accessing mortgage or rental relief. These efforts are aimed at
aid, small business grants and loans). This package is in directing assistance to the lower portion of the ‘K-recovery’ and
addition to the approximately $3.5 trillion in fiscal sup- the expansion of the child tax credit is targeted at reducing
port provided in 2020. childhood poverty in the US. From an economic, political, and
market impact, these actions will be far reaching.
UNIVERSAL BASIC INCOME In the near term, we expect the market to debate the poten-
While the next round of individual support checks (up to $1,400 tial inflationary impact of this increased spending, with a
per individual) has received most of the press attention of this positive impact on reflation-related equities and consumer
legislation, we think it is more important to focus on the $14,000 discretionary spending.
that an average family of four, with a household income under Longer term, we believe it opens a debate on which, if any, of
$150,000, could receive as result of these efforts, $11,000 of

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