The stock market surges as the transition moves ahead — and progressives have a clear message: Don’t forget about us. It’s Wednesday, and this is your politics tip sheet. Sign up here to get On Politics in your inbox every weekday.
Where things stand
Joe Biden and Kamala Harris formally unveiled six top members of their foreign policy and national security team yesterday, as they seek to reassert a sense of political normalcy after four volatile years. Speaking in Wilmington, Del., Biden declared that the group — all six of whom are veterans of the Obama administration — was “ready to lead the world, not retreat from it,” a clear rebuke of President Trump’s “America first” ideology.
“This team behind me, they embody my core belief that America is strongest when it works with its allies,” he said. “Collectively, this team has secured some of the most defining national security and diplomatic achievements in recent memory — made possible through decades of experience working with our partners.”
Linda Thomas-Greenfield, Biden’s pick to become the ambassador to the United Nations, declared: “America is back, multilateralism is back, diplomacy is back.”
As Biden assembles his team, he is working to unify a factious Democratic Party, whose young, progressive wing has grown increasingly empowered in recent years — and whose leading voices have no interest in a rerun of the Obama years.
Representatives Alexandria Ocasio-Cortez, Ilhan Omar and Rashida Tlaib — members of the so-called Squad — yesterday became the first House members to sign a petition urging Biden not to name Bruce Reed, his former chief of staff, to lead the Office of Management and Budget.
The petition calls Reed a “deficit hawk” and calls him out for expressing support in the past for cuts to Social Security and Medicare.
And one day after Senator Dianne Feinstein announced that she would give up her position as the top Democrat on the Judiciary Committee, bowing to pressure from the party’s left wing, a number of progressives indicated that they weren’t satisfied with deposing her — they also wanted a say in her replacement.
Some indicated yesterday that they did not want Senator Richard Durbin of Illinois, the Democrat on the committee who is next in line in seniority, to take the top spot, and instead favored Senator Sheldon Whitehouse of Rhode Island. Seen as a friendlier ally to the left, he issued a statement last night in which he did not rule out a run for the top spot.
A wave of states certified their election results yesterday, a procedural move that would barely merit a mention after a typical election. This year, however, the validation of those results felt hard-won.
Pennsylvania, Nevada and Minnesota all certified their results in favor of Biden, delivering him 36 electoral votes between them. North Carolina certified its 15 electoral votes for Trump.
“I want to thank the election officials who have administered a fair and free election during an incredibly challenging time in our commonwealth and country’s history,” Tom Wolf, the Democratic governor of Pennsylvania, wrote on Twitter.
The stock market soared to record highs yesterday, as investors responded to the news that the head of the General Services Administration had acknowledged Biden’s victory and that the president-elect would nominate Janet Yellen as Treasury secretary. A former chairwoman of the Federal Reserve, Yellen has been an outspoken proponent of government spending to shore up the economy.
Trump gave a one-minute-long address to reporters at the White House briefing room yesterday afternoon, seeming to take credit for the stock market surge.
“It’s the 48th time that we’ve broken records in, during the Trump administration, and I just want to congratulate all the people within the administration that worked so hard, and most importantly I want to congratulate the people of our country, because there are no people like you,” he said.
Photo of the day
Biden put his mask on after introducing his choices for his foreign policy and national security team.
What kind of Treasury secretary will Janet Yellen be?
Biden’s expected nomination of Yellen as his Treasury secretary has generally been met with satisfaction from across the political spectrum, earning praise from business leaders and financiers as well as progressive policymakers.
Yellen served as chairwoman of the Federal Reserve during both the Obama and Trump administrations and would bring decades of experience to the job, as well as a reputation for seriousness and rigor. And, as our senior economics correspondent Neil Irwin writes in an analysis for The Upshot, “she’ll need every ounce of those qualities” as she seeks to pilot the economy out of a pandemic-driven recession.
Neil agreed to answer a few questions about Yellen and how she would be likely to approach the role.
We live in a time of deep partisan divides — which often means congressional gridlock. How much power would Yellen have as Treasury secretary to help prop up the economic recovery, with or without legislative help?
The biggest thing that Yellen will be able to do unilaterally as Treasury secretary is to take a different stance than her predecessor, Steven Mnuchin, on how restrictive to be in the design of joint Fed-Treasury lending programs. The Mnuchin Treasury has insisted that these programs be structured in ways that limit the government’s potential losses, but that has made them less effective and less appealing to businesses. The Yellen Treasury will probably take a different stance.
Beyond that, the Yellen Treasury will have some power at the margins to try to interpret tax and regulatory policies in ways that help the recovery, but will need a lot of help from Congress to really do the things that economists think are needed to help the economy get through the winter and to the period of widespread vaccine availability.
While the Fed is concerned with monetary policy — that is, the flow of available currency into the economy — the Treasury Department is more concerned with fiscal policy, which has to do with taxing and spending. Do we have a sense of how Yellen will approach fiscal matters?
Yellen is certainly comfortable with ambitious spending plans and high budget deficits in the near term as the nation tries to get out of the pandemic-induced downturn. And she strongly believes that there is a crucial role for the government to help workers. But she is more worried about long-term budget deficits than some on the left. She is worried about long-term entitlement spending and believes that public debt can weigh on growth.
In the near term, in crafting a pandemic response, that doesn’t matter, but in the medium term she could well find herself as a voice of fiscal restraint relative to the left flank of the Democratic Party.
While the administrations will change in January, Jerome Powell will remain as Fed chair. What is Yellen’s relationship with him like, and how much will he serve as a source of steadiness and continuity?
Yellen and Powell know each other very well and have a great deal of mutual respect. During the time she was in charge of the Fed, Powell was an influential Fed governor, an ally of Yellen on most issues and someone she entrusted with overseeing a lot of the nuts and bolts of the work the Fed carries out.
They may have some philosophical differences, but I think they will be very effective collaborators in trying to ensure that these different arms of the government are pushing toward the same goal.
And while Powell is politically more conservative than she is, they share a very pragmatic streak and a sense that getting the right answer for the American economy is more important than ideology.
As you write in your story, much of the Treasury secretary’s responsibility also has to do with foreign policy, and how the United States interacts with its trading partners. What do we know about the challenges Yellen will face, particularly when it comes to the United States’ rivalry with China — and do we have any idea how she will approach those challenges?
This is one of the areas where we know less about what Yellen will do. As Fed chair, you’re really playing second fiddle when it comes to setting the terms of the United States’ economic relationship with other major powers like China. It’s really the purview of the Treasury secretary, the secretary of state, and ultimately the president.
Today, the relationship between the U.S. and China is more inherently hostile than it was during Yellen’s Fed chairmanship. She’ll have power over some areas of that relationship that she has never really touched before, such as the Treasury body that controls whether foreign interests should be prohibited from owning companies in the United States on national security grounds. (This is the mechanism by which the Trump administration is forcing a divestment of TikTok.) Yellen knows the economic relationship as well as anybody, but even after covering her for a long time, I don’t know how she will approach the geostrategic aspects of things.