Only a handful of presidents could boast Joe Biden’s range of legislative and foreign policy accomplishments but leaves behind some tough fiscal and security challenges.

After finishing behind Senators Bernie Sanders, Elizabeth Warren and former South Bend Mayor Pete Buttigieg in the 2020 Iowa caucuses and New Hampshire primary, he rallied to win in South Carolina.

Old-line democratic moderates embraced him but the party’s platform and his governing agenda have much reflected the progressive wing’s identity politics, indifference to large deficits and embrace of the modern monetary policy, and reluctance to devote more resources to defense.

Gender and race were key considerations in selecting Vice President Kamala Harris and Justice Ketanji Brown Jackson and in filling key administration positions.

His cabinet lacks adequate business representation.

The combination of the Chips and Science Act and Inflation Reduction Act sets the economy in a much needed, new direction.

He added to Mr. Trump’s tariffs on Chinese imports but has also countered China’s subsidies to manufacturing with industrial policies to boost the semiconductor, electric vehicle, battery and other green and strategically important industries.

In formulating these programs, he sought to spread employment benefits more broadly with minorities, women and unions but these add costs to programs. After the Supreme Court decision striking down racial preferences in higher education, the next president may face constitutional challenges to continue these.

The same goes for the Infrastructure and Jobs Act. In combination, all three laws and his $1.9 trillion American Rescue Plan, were not adequately funded.

Along with Mr. Trump’s COVID spending, the resulting borrowing required the Federal Reserve to print nearly $5 trillion in new money, and the federal deficit is now about 7% of GDP.

Along with student debt forgiveness, aid to Ukraine and Taiwan and additional subsidies for health care, those have boosted the federal deficit to its highest peacetime level other than during the COVID and Global Financial Crisis recessions.

Going forward federal borrowing pressure on capital markets will either raise interest rates or require additional doses of accommodative monetary policy and above target inflation.

Mr. Biden lacked the energy and vision to tackle some of the country’s most intractable problems—a national housing shortage and the eroding quality of education.

He leaves his successor a military that is inadequately resourced to defend American allies against the rapidly solidifying Axis of Autocracies—Russian, China, North Korea and Iraq—if called upon in simultaneous conflicts in the Pacific and Eastern Europe or the Middle East.

The Pentagon likely needs a 2% of GDP boost to spending to address these challenges, but Mr. Biden has not adequately prioritized defense in his budgets.

On paper, he has established and strengthened an impressive lattice of alliances in Asia with Australia, Japan, South Korea and others and added Sweden and Finland to NATO, but has been timid to the point of encouraging aggression. For example, in confronting Iranian-sponsored terrorism in the Red Sea, underarming Kyiv and limiting the use of American weapons inside Russia in response to Moscow’s wanton aggression.

Along with his disastrous withdrawal from Afghanistan, U.S. allies cannot be blamed for questioning whether an adequate American military would show up or stay as long enough to save the Baltic States from Russia or Taiwan and the Philippines from China.

A recent RAND analysis concludes Japan, Australia, the UK and Canada likely would not risk their armed forces to aid U.S. forces if China invaded or blockaded Taiwan. India and South Korea have indicated they are disinclined.

This is poor calculus, because the loss of Taiwan’s chips foundries would have devastating consequences for all our economies.

Mr. Biden bequeaths to his successor an America that is in tough fiscal condition, not strong enough and where it counts, perhaps standing alone.

Now it’s up to Ms. Harris and Mr. Trump to explain to the American people how they propose to fix the nation’s finances, encourage the states to address challenges in housing and education, better secure our vital foreign interests, and reassure our allies of American resolve.

It’s a tough circle to square with progressives lobbying for new domestic initiatives like greater federal support for childcare and China continuing its naval buildup.

The bottom line is more spending and larger deficits—in the range of the current 7% of GDP or higher—are likely.

In the wake of a rapid post-COVID recovery and the Fed’s anti-inflation policies, the economy may suffer a brief recession. But that stimulus will return the economy near full employment, albeit with a combination of inflation and interest rates than prevailed the decade before COVID.

Robust demand will give equities adequate room to flourish. We can expect broader rallies less dependent on a handful of high-tech stocks and companies with pricing power being among the most attractive.

_______________
Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.