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Biden's Economic Team Signals Bold Stimulus, Moderate Policy, CRE Experts Say

With the transition now well underway, despite President Donald Trump's continued push to overturn the results of the election, President-elect Joe Biden has made a series of key picks for the nation's top economic policy roles that signal how his administration will govern.

President-elect Joe Biden

The nominations give confidence to commercial real estate experts that Biden will be surrounded by a team of experienced policymakers, that he will look to stimulate the economy to recover from the coronavirus pandemic, and that he is unlikely to pass a heavily progressive agenda through Congress

"It's very clear Biden wants to lead from the center and he is not going to be whiplashed by the far left," Walker & Dunlop CEO Willy Walker said. "All of his picks — State, national security, the economic team — everybody has been right down the middle of the fairway."

Biden selected former Federal Reserve Chair Janet Yellen as his nominee for Treasury secretary, one of the most influential economic leadership positions. Current Treasury Secretary Steve Mnuchin has been closely involved in coronavirus stimulus negotiations, and experts say Yellen's past positions suggest she could ramp up those efforts. 

"I think she's going to be very aggressive in trying to stimulate the economy in 2021," Sage Policy Group CEO Anirban Basu said of Yellen. "She's going to be an aggressive stimulator of economic activity, I think even more so than Treasury Secretary Mnuchin."

Oxford Economics Chief U.S. Economist Gregory Daco said he thinks Yellen will push for more coronavirus relief for individuals and businesses. 

"She will, I think, put a lot of emphasis on the human nature of the crisis, on the fact that millions of people have lost their jobs, businesses are struggling to survive, and really put a face to the crisis and try to generate support for measures via that approach," Daco said.

Former Federal Reserve Chair Janet Yellen

The Treasury secretary also has influence on the regulation of the financial markets, and Daco said he thinks the Yellen pick signals that Biden will look to tighten financial regulations in a measured way that doesn't prevent economic growth.

"I find that Yellen's appointment at Treasury is an interesting one in that she has in general been in favor of slightly tighter financial market regulation, but thoughtful regulation," Daco said. "At the Fed, she was always key on highlighting that it's not just about tighter regulation, it's about smart regulation, and regulation that doesn't hamper growth while reducing the risk."

The transition team also announced that Biden would nominate Adewale Adeyemo, who served in multiple economic positions during the Obama administration, as deputy secretary of the Treasury Department. 

For the chair of the Council of Economic Advisers, Biden picked Princeton University labor economist Cecilia Rouse. He also picked Jared Bernstein and Heather Boushey to serve as members of the CEA. 

Biden selected Brian Deese, a former Obama administration official who served as sustainability director for BlackRock in the intervening years, to lead the National Economic Council. During the Obama administration, Deese served as deputy director of the NEC under Jeffrey Zients, who has been a co-chairman of Biden's transition team. 

Walker said he thought Zients did a "fantastic" job at NEC and he expects Deese will take a similar approach to the position. 

"I think you can see the apple's not falling far from the tree," Walker said. "When I saw that Deese had worked for Jeff, and I know Jeff is running the transition, I said, 'That's going to be good.'"  

The president-elect picked Neera Tanden, the head of the Center for American Progress, to lead the Office of Management and Budget. Tanden emerged as a target for Republican lawmakers after her selection last week, the Washington Post reported, with some concerned that she was overly partisan.

Basu said he thinks all of Biden's nominees are well-qualified and described it as a "first-class group," but he thought some of them leaned surprisingly far to the left, including Tanden, Bernstein and Boushey. 

"This is a group that is very much associated with organized labor, that focuses heavily on redistribution of income, and I might have thought given Joe Biden's history as a legislator and given that Democrats failed to win seats in the House and may not end up controlling the Senate, that Biden would have picked a more centrist team," Basu said. 

During the campaign, Biden put forward a series of economic policy proposals that could impact the commercial real estate industry, including major changes to the tax code. 

He called for an increase in the corporate tax rate from 21% to 28%, and for an end to the 1031 exchange program, used by real estate investors to defer taxes on property sales. He proposed changes to the opportunity zone program, such as more reporting requirements on the community impact of investments and restrictions on what projects can use the program. 

Biden's campaign also proposed a $2 trillion sustainable infrastructure and clean energy plan that could create a national set of building standards and lead to the retrofitting of 4 million buildings across the country. 

The next president's ability to pass legislation could be determined by the Jan. 5 Georgia runoff elections, which will decide the balance of power in the Senate. But even if the Democrats win both races to create a 50-50 tie, with Vice President Kamala Harris giving them the tie-breaking vote, experts don't foresee Biden being able to pass a liberal legislative agenda. 

Neera Tanden, pictured in 2019, was nominated to serve as Joe Biden's director of the Office of Management and Budget.

Wells Fargo economist Michael Pugliese noted that the Democrats would still need to win the votes of their most moderate senators, such as West Virginia Sen. Joe Manchin and Montana Sen. Jon Tester, and they have a single-digit margin in the House of Representatives. 

"Even if the Democrats sweep both of the Georgia Senate seats, it would obviously be important for procedural reasons, for court and Cabinet nominees, but even then your margin for error is almost as small as it can be," Pugliese said. "I'm pretty skeptical there's going to be huge sweeping stuff outside of COVID relief. In that world, you're talking about more incremental policy changes as opposed to a wholesale rewrite of the tax code."

Pugliese said the nominations Biden has made thus far haven't changed any of his forecasts for U.S. economic growth under the next president. 

"Holistically, it's what I would have expected from a Biden administration, it's a little bit of everything," he said. "It's a mix of holdovers from the Obama administration, it's a mix of more moderate, more progressive and everything in between."

The Biden administration plans to create a position dedicated to finding common ground with conservatives, Bloomberg reported, citing comments made Monday by the director of the president-elect's Office of Public Engagement, Rep. Cedric Richmond.

Daco said he expects the Republicans to win at least one of the Georgia seats, and he sees Biden's leadership picks thus far as an attempt to reach legislative compromises with moderate Republicans. 

"He's really tried to assemble a team that's not just good economists, but also savvy policymakers," Daco said. "The Senate is likely to remain in Republican hands, so Biden will have to govern with one hand behind his back unless he can garner support from some moderate Republicans. I think that's where this team will be extremely useful is in trying to lobby for some proposals that might have a bipartisan element."

Even with the attempt to reach across the aisle, Daco said he doesn't expect Biden will be able to pass a significant legislative agenda. He said he will have to use executive actions to shape policy on Democratic priorities. 

"If he wants to implement some of his agenda, he's going to have to use the executive lever, whether on trade, immigration, green energy or financial regulation, that's really the channel that he's going to have to use," Daco said. "With a split Senate or slight majority for Republicans, he's going to struggle to implement any substantial agenda via Congress."