Biden outlines multi-trillion dollar fiscal stimulus plan
Joe Biden unveiled his proposal for a massive new programme of fiscal stimulus centred on public investment to boost the nation's productivity and make growth more equitable.
Speaking at the weekend, the US President claimed that his $2.7trn 'American Jobs Plan' would create millions of "good-paying" jobs and make the country more competitive.
He also emphasised that "no one making under $400,000 will see their federal taxes go up, period."
But as Philip Marey, senior US strategist at Rabobank, pointed out: "Democrats and Republicans talk about infrastructure they think of very different things. Hence in order to get a supermajority it would have to be a traditional infrastructure plan. The greener it gets, the less likely it is to get Republican support."
The plan's outlines called for approximately $2.1trn of new government outlays on transit infrastructure, research and development, and domestic manufacturing supply chains.
Another $600bn in transfers would be funeled towards affordable housing access and, home and community-based care.
Indeed, Marey further pointed out how Republican Representative Sam Graves had already said that his party would not support another Green New Deal "disguising itself as a transportation bill.".
According to the Penn Wharton Business School at the University of Pennsylvania, in its current form, Biden's proposals would increase public debt by 8.16 percentage points as a proportion of gross domestic product by 2031.
GDP on the other hand would in fact be a quarter of a percentage point lower than would otherwise be the case.
To take note of, the business school added that the tax provisions proposed by the Biden administration would 'crowd out' capital investment in the private sector, reducing the capital stock and more than offset the boost to productivity from increased government spending.