June 2, 2023


IMMEDIATE RELEASE 17 December 2020WASHINGTON MERRY-GO-ROUNDToday’s Events in Historical PerspectiveAmerica’s Longest-Running Column Founded 1932The Biden BounceBy Douglas Cohn and Eleanor Clift          WASHINGTON – We have been here before: economic collapse; a war; pent-up demand. The era was post-World War II. Today’s war is a fight against a lethal virus that is damaging the economy as it wreaks havoc with our public health system. People are dying at a high rate and businesses are collapsing. However, unlike Presidents Franklin Roosevelt and Harry Truman from that previous era, our outgoing president is behaving like Nero fiddling as Rome burned.          After Germany and Japan surrendered in 1945, the American people braced themselves for a return to the prewar Great Depression. After record deficit spending to support the war effort, an economic decline would be inevitable, so the thinking went. But a British economist by the name of John Maynard Keynes had a different idea. He called it “priming the pump,” the idea that deficit spending during an economic downturn stimulates the economy. The war compelled such spending at home and abroad.          The post-war Marshall Plan brought Europe back to life, and now Congress is readying the fourth tranche of a Marshall Plan for America. It will be money well spent for Americans facing foreclosure, evictions, loss of income, and worse as the pandemic continues to ravage neighborhoods and cities and states with an intensity worse than what we faced at the outset of the pandemic.          When Biden takes office on January 20, he will reap the benefit of this pump priming in the same way Dwight Eisenhower benefited when he was elected president in 1952. After the war, the soldiers came home and there was a surge in pent-up demand. They were building families – remember the baby boom! There was a shortage of housing and all the goods that go into creating a household.          That demand for goods and services drove the economy for three decades, well into the 1970s. We will soon see something comparable as vaccines to combat Covid-19 come online and Americans once again begin spending in restaurants and on travel and joyous family gatherings.          It doesn’t take a genius to figure out that pent-up demand drives consumer spending. Americans are ready to emerge from the cocooned life forced by the pandemic.          We will soon have a president who sees the possibilities on the horizon and will put policies in place to produce what we call the Biden Bounce.          It will be spurred by the new president’s policies. He didn’t run on the so-called Green New Deal, but he is all in when it comes to creating incentives for new industries that are building a sustainable future.          Trump took a victory lap when the stock market reached 30,000, but that has only returned the Dow Jones Average to levels last seen a year ago. So, 35,000, here we come.          We are looking at a bright future in 2021 thanks to the arrival of a vaccine to halt the scourge of Covid-19, relief at installing a stable leader in the White House, and policies put in place by professionals who have the knowhow to take on the big challenges. This combination of events and policy prescriptions advanced by Biden and his team will give America the fresh start it needs.          Just as Eisenhower presided over a post-war boom, Biden is positioned to reap the benefits of America’s post-pandemic boom. There’s a lot of nostalgia about the fifties, some of it misplaced. Too many people were left behind. But it was an economic engine that Biden, with his apt slogan, Build Back Better, can learn from and improve upon.          In 1932, the Great Depression was raging, but with FDR’s election, the premature slogan was “Happy days are here again” a sentiment not to be realized for 13 more years. Today, it is a sentiment that could begin to be realized on January 20, 2021.           Douglas Cohn’s latest books are World War 4: Nine Scenarios (endorsed by seven flag officers) and The President’s First Year: The Only School for Presidents Is the Presidency.          Twitter:  @douglas_cohn          © 2020 U.S. News Syndicate, Inc.          Distributed by U.S. News Syndicate, Inc.          END WASHINGTON MERRY-GO-ROUND


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