THE NEW YORK TIMES, MONDAY, NOVEMBER 9, 2020 N B5
ECONOMY
rules to tinkering with corporate
taxation, here are some of the
ways a Biden presidency could
unilaterally influence economic
policy.
Stimulus Spending
In the run-up to the election, Mr.
Trump saw the limits of the White
House’s ability to jump-start the
economy without Congress. He
repurposed some federal funds to
temporarily extend expanded un-
employment insurance and al-
lowed companies to defer col-
lection of workers’ payroll taxes
but found his hands largely tied
beyond those measures. Econo-
mists and political advisers say
Mr. Biden could seek other cre-
ative approaches if a Republican
Senate blocks the kind of big
spending package that Demo-
crats have been pushing.
That includes providing stu-
dent debt relief, which Ms. Wong
said would work as a sort of stimu-
lus by removing the burden of
those payments. Mr. Biden could
direct the education secretary to
forgive student loans up to a cer-
tain amount — Ms. Wong would
favor as much as $50,000 to
$75,000 for low- and moderate-in-
come households. That move, she
said, would strongly benefit work-
ers from minority racial and eth-
nic groups.
The administration could also
use executive authority to raise
the minimum wage for federal
contractors to $15 an hour, she
said, providing a pay boost for
many thousands of workers.
Mr. Biden will be able to exert
some additional oversight over
the $2.2 trillion stimulus package
that passed in March. For in-
stance, small businesses that took
Paycheck Protection Program
loans were required to keep work-
ers on payrolls, and he could in-
struct his Treasury Department to
more rigorously scrutinize the
loans to ensure that the money
was actually going to pay salaries
and overhead costs.
Mr. Biden could also take a page
from Mr. Trump and seek to repur-
pose unspent funds from that
stimulus legislation, including
hundreds of billions of dollars that
were earmarked for the Paycheck
Protection Program but never al-
located before a congressional
deadline ended the program. He
could also lean on the Treasury to
make lending facilities estab-
lished by the Federal Reserve
more generous and attractive to
users, if they haven’t expired by
the time he enters office.
Tinkering With Taxation
Mr. Biden proposed trillions of
dollars of tax increases on high
earners and corporations in his
campaign. Much of that agenda
would require cooperation from
Congress, but in a few areas, a Bi-
den administration could act on its
own to raise taxes — largely by
changing regulations governing
how Mr. Trump’s signature 2017
tax law is carried out.
Several of those regulations ap-
ply to income earned abroad by
multinational corporations that
operate in the United States. A Bi-
den Treasury Department could
move to reverse a series of deci-
sions that Mr. Trump’s team made
after the 2017 law was passed that
effectively reduced the liability of
multinationals under a pair of new
taxes created by the law, known as
the Base Erosion and Anti-Abuse
Tax and the Global Intangible
Low-Taxed Income.
Mr. Biden campaigned on a
promise to raise U.S. tax liability
on multinationals’ global income,
which he could attempt to do via
regulation by changing how the li-
ability is calculated. His Treasury
Department could also attempt to
roll back a so-called high-tax ex-
emption, which allowed some
companies to lower their tax bills
in the United States.
A Biden Treasury could also
change the regulations covering
Opportunity Zones, another cre-
ation of the 2017 law that is in-
tended to entice investment in
high-poverty areas by providing a
tax break. Such changes could
make it more difficult for invest-
ors to qualify for the tax benefits
from the zones, and Treasury
could impose more stringent re-
porting requirements on projects
that qualify for the breaks.
Trade Policies
As Mr. Trump has shown, the ex-
ecutive branch has a great deal of
latitude regarding trade policy.
Mr. Biden will face several trade
decisions in the short term, in-
cluding whether to continue with
Mr. Trump’s ban on TikTok and
WeChat, the popular social media
apps, and whether to retain Amer-
ica’s tariffs on Chinese goods and
foreign metals.
Mr. Biden would not need con-
gressional approval to deal with
these and other outstanding trade
issues — including how to resolve
a spat with the European Union
over subsidies given to Boeing
and Airbus, how to resolve global
negotiations over digital services
taxes and whether to follow
through on Mr. Trump’s plans to
place new tariffs on Vietnam.
“The administration would
want to keep Congress in the loop,
but they have a lot of discretion to
shift away from Trump’s policies,”
said Simon Lester, a trade policy
expert at the Cato Institute.
Mr. Biden will also have broad
scope to stake out his position on
America’s economic relations
with China, including whether to
continue limiting U.S. exports of
sensitive technology like artificial
intelligence and robotics. And the
next president will also have to de-
cide whether to pursue additional
sanctions for human rights vio-
lations in the Chinese region of
Xinjiang and whether to continue
trying to block Chinese invest-
ment in the United States.
Congressional approval would
be needed if Mr. Biden wanted to
pass any free trade deals. But his
advisers have said that they are
unlikely to pursue any new agree-
ments in the short term, instead
focusing on domestic priorities.
Financial Regulation
Some of the biggest Trump-era
changes to bank regulation have
been done through the regulatory
agencies, rather than through
Congress. Examples include a
weakening of the Volcker Rule,
which keeps banks from betting
for their own profit, and a rework-
ing of the Community Re-
investment Act, which requires
banks to invest in poor communi-
ties.
A new crew of regulatory offi-
cials will have leeway to either
undo those tweaks or to impose
new ones — which will probably
cut toward stronger oversight.
Much like the slow drip of deregu-
lation under the Trump adminis-
tration, any changes coming out of
the Fed and its fellow regulatory
agencies are likely to be small and
steady.
“It is going to be a tough slog for
the Democrats on the legislative
front,” said Ian Katz, a director
and financial policy analyst at
Capital Alpha Partners. “The ac-
tion is really with the regulators.”
But changes may not come that
quickly, even if Mr. Biden taps
more pro-regulatory officials for
the various agencies. One of the
most powerful regulatory posi-
tions — the Fed’s vice chair for su-
pervision — is held by Randal K.
Quarles, a Trump appointee
whose term is not up until October
2021.
One area to keep an eye on is cli-
mate finance: The independent
Fed has been slow to embrace cli-
mate stress tests, or to publicly
examine how its own policies
might take into account climate
concerns, against a political back-
drop in which climate-related
measures seemed overtly politi-
cal. That could change in the next
four years.
Consumer Protection
A Biden administration could ex-
ert huge influence over consumer
protections, including those in-
volving debt collection, payday
lending and foreclosure abuse.
The Supreme Court ruled in
June that the White House has the
power to fire the director of the
Consumer Financial Protection
Bureau without cause, rejecting a
federal law that sought to place
limits on presidential oversight of
independent agencies. That
means Mr. Biden will be free to re-
place Kathleen Kraninger, the bu-
reau’s current director, with some-
one who will more rigorously
scrutinize businesses and ramp
up enforcement.
Mr. Katz pointed to payday
lending regulation and a debt col-
lection rule at the Consumer Fi-
nancial Protection Bureau as
things that could be on the table
quickly.
Richard Cordray, the bureau’s
former director, said in a white pa-
per earlier this year that it should
be taking action to help people
avoid foreclosure and eviction
during the pandemic and be care-
fully monitoring the practices of
debt collectors.
“The C.F.P.B. should make sure
companies are complying with all
emergency protections on the
books, and maximizing assistance
to consumers to prevent garnish-
ments, foreclosures and reposses-
sions,” said Linda Jun, senior pol-
icy counsel at Americans for Fi-
nancial Reform.
In a Divided Washington,
Biden Could Still Wield
Influence on the Economy
FROM FIRST BUSINESS PAGE
ERIN SCHAFF/THE NEW YORK TIMES
President-elect Biden will face several trade decisions in the short term,
including whether to retain American tariffs on Chinese goods and foreign
metals. And economists say he could seek creative tactics if a Republican
Senate blocks a stimulus package, including providing student debt relief.
JIM WILSON/THE NEW YORK TIMES
‘There’s a tremendous
amount that can be
done without
Congress.’
Felicia Wong,
the Roosevelt Institute
cated a desire on Wednesday to
pass a new stimulus bill before
the end of the year, though on
Friday he said that good jobs
numbers meant that stimulus
should be relatively small.)
And it is possible that when
the coronavirus crisis abates, the
economy will snap back to health
on its own, particularly if the
Biden administration handles
public health policy effectively.
But the reaction to the election
in financial markets in recent
days suggests that something
like the Obama recovery is more
likely: in short, a long slog back
to health.
Treasury bond yields fell
sharply Wednesday, suggesting
investors expect less fiscal stim-
ulus, slower growth and easier
monetary policy from the Fed
than had been envisioned pre-
election. And the stock market
soared Wednesday and Thurs-
day, as investors priced in both
easier money from the Fed and a
Biden administration that will be
constrained in its ability to raise
taxes and expand regulation on
businesses.
By contrast, in the run-up to
the election, markets had be-
come more positioned for a world
in which a Biden administration
came to office with a Democratic
Senate, and could more fully
embrace the kind of transforma-
tive agenda many on the left
would prefer.
“The whole blue wave idea
that would have come with not
only very generous stimulus in
the near term but structural
reforms and big infrastructure
investment, that seems to be off
the table,” said Julia Coronado,
president of MacroPolicy Per-
spectives.
On the campaign trail, Mr.
Biden spoke of transformative
efforts to fund clean energy and
other infrastructure investment,
which analysts expected would
imply the spending of trillions of
dollars and the creation of mil-
lions of jobs.
The experience of the final six
years of the Obama presidency
looms large. In that span, Repub-
licans controlled at least one
chamber of Congress and
blocked any large-scale fiscal
policy — and insisted on spend-
ing cuts in response to high
deficits. Legislative deal-making
took place at the margins, if at
all. It was the Federal Reserve
that played the dominant role in
trying to propel an economic
recovery, through quantitative
easing and other unconventional
policies.
Last time, the recovery gener-
ated by that combination was a
long march back toward prosper-
ity.
In the last recession, Congress
passed a large fiscal stimulus bill
in early 2009 that helped start an
expansion in mid-2009. When
Republicans took control of the
House in early 2011, they insisted
upon a turn toward deficit reduc-
tion, and the expansion contin-
ued slowly in the years that
followed, with help from the
Fed’s actions.
From the time that expansion
began in mid-2009, it took more
than six years for the unemploy-
ment rate to fall to 5 percent, its
level when the Great Recession
began. The Fed’s programs were
effective at driving up financial
markets, but with less clear-cut
benefits for ordinary Americans.
The Fed chair, Jerome Powell,
has been vocal about the limits of
the Fed’s tools, stressing that the
central bank can lend money but
cannot spend it. He has called on
Congress to use its power of the
purse to inject money into the
economy directly.
“The upshot of all of this is
that the configuration of govern-
ment means the Fed is going to
be expected and required to be
even more stimulative than they
might have been otherwise,” said
Nathan Sheets, chief economist
at PGIM Fixed Income and a
former Fed and Treasury De-
partment official. “The fiscal
impulse is likely to be diminished
relative to a blue-wave scenario
and even relative to a scenario
where Trump won and Demo-
crats won the Senate.”
A Biden win should ensure
continuity at the Fed, Mr. Sheets
said, either because he re-
appoints Mr. Powell to a second
four-year term when his current
one expires in early 2022, or
because he appoints someone
with broadly similar views on
monetary policy and credibility
on Wall Street, like the Fed gov-
ernor Lael Brainard or the for-
mer chair Janet Yellen.
There are ways the Biden
economy might escape the slow-
growth economic outlook, if the
Senate goes along with enough
coronavirus rescue funds to
prevent widespread business
failures and sharp pullbacks by
state and local governments.
Strategists at Jefferies, for exam-
ple, project that a “skinny” stim-
ulus of $500 billion to $1 trillion
could be in play.
Then, a successful public
health policy enables economic
activity to quickly return to
pre-pandemic levels.
“If we got a trillion dollars of
stimulus, you could have a de-
cent constellation of policies if an
administration comes in and
manages the virus well,” Ms.
Coronado said. “We need to
manage the virus efficiently, and
if we got a good federal response
by the end of the first quarter
combined with some stimulus,
you could see decent momen-
tum.”
The global financial crisis a
dozen years ago was caused by
fundamental imbalances in the
economy that took time to repair,
whereas the coronavirus reces-
sion was caused by a surprise
shock — which raises at least the
possibility of a much quicker
return to normal.
So the biggest question may
turn out to be this one: Has the
pandemic fundamentally broken
anything about the economy? If
not, a speedy recovery may be
possible even without a political-
ly aligned Congress. If yes, it
might feel like the early 2010s all
over again.
Biden’s Economy May Resemble the Long Slog of the Obama Years
FROM FIRST BUSINESS PAGE
With no blue-wave
election, bold action
is unlikely.
The Upshot provides news, analysis
and graphics about politics, policy
and everyday life.
nytimes.com/upshot
President Barack Obama in January 2015. Republicans blocked major fiscal policy in his final years in office.
STEPHEN CROWLEY/THE NEW YORK TIMES
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
FIC RESTAURANTS,INC.,et al.,
Debtors.
)
)
)
Chapter 11
Case No.20-12807 (CSS)
Jointly Administered
NOTICE OF COMBINED HEARING ON ADEQUACY OF
DISCLOSURE STATEMENT,CONFIRMATION OF THE PLAN,
AND PROCEDURES FOR OBJECTING TO THE DISCLOSURE
STATEMENT AND CONFIRMATION OF THE PLAN
On November 1,2020,FIC Restaurants,Inc.,and its affiliated debtors,
NeapolitanGroupHoldings,LLC,FICHoldings,LLC,Friendly’sRestaurants,
LLC,and Friendly’s Franchising,LLC (collectively,the“Debtors”) filed for
relief under chapter 11 of the Bankruptcy Code with the United States
BankruptcyCourtfortheDistrictofDelaware(the“Bankruptcy Court”).
Copies of all documents relating to the Debtors’chapter 11 cases may be
downloaded from https://www.donlinrecano.com/friendlys or may be
obtained by a written request to Donlin,Recano & Company,Inc.,re:FIC
Restaurants,Inc.,et al.,P.O.Box 199043,Blythebourne Station,Brooklyn,
NY11219. ProposedcounseltotheDebtorsisWOMBLEBONDDICKINSON
(US) LLP,1313 North Market St.,Ste.1200,Wilmington Delaware,19801,
Telephone(302)252-4320.
1.Combined Disclosure Statement and Plan. On November
2, 2020, the Debtors filed its proposed combined disclosure statement
and Chapter 11 plan (the“Combined DS and Plan”) [Dkt.No.18],which
provides,among other things,that (except as noted in the Combined DS
and Plan,the Debtors’Secured Lenders) all creditors of the Debtors will
be paid in full on account of Allowed Claims (as such term is defined in
the Combined DS and Plan). As a result,all creditors are conclusively
presumed to have accepted the Combined DS and Plan, and
creditors will receive payment in full of their Allowed Claims.
The Combined DS and Plan contains Release, Exculpation and
Injunction provisions that you are advised should be reviewed.
2.Combined DS and Plan Hearing. A combined hearing
(the “Combined Hearing”) to consider both the adequacy and the
confirmation of the Combined DS and Plan will be held at1:00 p.m.
(Eastern Time) on December 17, 2020, before the Honorable
Christopher S. Sontchi, Chief United States Bankruptcy Judge, in
Courtroom No. 6 of the United States Bankruptcy Court for the District
of Delaware, 824 Market St. N, 5th Floor, Wilmington, DE 19801. The
Combined Hearing may be adjourned or continued from time to time
without further notice other than the announcement by the Debtors
of the adjourned date(s) at the Combined Hearing or any continued
hearing or as indicated in any notice of agenda of matters scheduled for
hearing filed by the Debtors with the Bankruptcy Court.The Combined
DSandPlanmaybemodified,ifnecessary,priorto,during,orasaresultof
theCombinedHearing.
3.Objections to the Combined DS and Plan.The deadline to
objectorrespondtotheadequacyandtheconfirmationoftheCombined
DS and Plan isDecember 10, 2020 at 4:00 p.m. (Eastern Time).
Objections and responses, if any, must be filed with the Bankruptcy
Courtandservedupontheappropriatenoticepartiesinaccordancewith
the Order scheduling the Combined Hearing [Dkt. No. 75]. Objections
not timely filed and served in the manner set forth above may not be
consideredandmaybeoverruled. AClaimantshouldconsultanattorney
ifthereareanyquestions.
4.Additional Information. For further information, including
a copy of Combined DS and Plan, please visit the Debtors’ Chapter 11
website athttps://www.donlinrecano.com/friendlysor call the
Debtors’claimagent,Donlin,Recano&Company,Inc.,at1-866-853-1834.