{"id":118244,"date":"2021-03-24T01:15:49","date_gmt":"2021-03-24T01:15:49","guid":{"rendered":"https:\/\/precoinnews.com\/?p=118244"},"modified":"2021-03-24T01:15:49","modified_gmt":"2021-03-24T01:15:49","slug":"biden-is-anything-but-sleepy-as-he-puts-together-radical-us3-trillion-spending-plan","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/economy\/biden-is-anything-but-sleepy-as-he-puts-together-radical-us3-trillion-spending-plan\/","title":{"rendered":"Biden is anything but sleepy as he puts together radical $US3 trillion spending plan"},"content":{"rendered":"

\u201cSleepy Joe\u201d may turn out to be one of the most energetic, reformist and progressive US presidents in modern history if Joe Biden\u2019s administration can follow up its $US1.9 trillion ($2.5 trillion) stimulus package with a $US3 trillion \u201cinfrastructure\u201d spending program.<\/p>\n

The administration is in the final stages of putting that plan together and it is apparent that it is far more than a plan to upgrade America\u2019s degraded infrastructure.<\/p>\n

<\/p>\n

Joe Biden could be marking himself as one of the most energetic, reformist and progressive US presidents in modern history with his spending spree.<\/span>Credit:<\/span>Bloomberg<\/cite><\/p>\n

Republican Senate leader Mitch McConnell may have accurately described the Democrat\u2019s plans as a \u201cTrojan Horse\u201d for a raft of progressive policies, including massive tax increases.<\/p>\n

It is clear that the program will include tax increases because Biden has said that, unlike the stimulus spending, the infrastructure program will be funded.<\/p>\n

During the election campaign he proposed a partial reversal of Donald Trump\u2019s $US2 trillion of tax cuts for companies and wealthy individuals.<\/p>\n

Trump cut the corporate tax rate from 35 per cent to 21 per cent; Biden proposed lifting it to 28 per cent. Trump reduced the top rate for individuals from just under 40 per cent to 37 per cent; Biden proposed restoring the former rate for those earnings more than $US400,000 while removing a range of tax breaks for the wealthy and taxing some capital gains as income. Minimum tax rates for US multi-national companies are another element that is being considered.<\/p>\n

The prospect of those tax hikes would normally unsettle financial markets \u2013 on some estimates the corporate tax increase could reduce the S&P 500 companies\u2019 earnings per share by nearly 10 per cent – but the combination of the stimulus package and the big new spending splurge the tax increases would help fund are helping to offset and muffle those concerns.<\/p>\n

The spending does appear to include some conventional infrastructure investment \u2013 spending on roads, rail, bridges, ports and broadband infrastructure.<\/p>\n

There\u2019s also expected to be, however, a big spend on \u201cgreen\u201d energy, including a national network of electric vehicle charging stations and solar and wind generation as well as training programs for workers, free community colleges, universal day care and national paid leave among other social programs.<\/p>\n

Both the likely tax package and the spending it will probably only partly fund are, in US terms, radical.<\/p>\n

The tax increases would be the first substantial reform of the US tax system since Bill Clinton\u2019s administration in 1993 while the \u201cinfrastructure\u201d spending has a whiff of Roosevelt\u2019s \u201cNew Deal\u201d response to the Great Depression about it.<\/p>\n

The Biden plan is progressive and does go beyond an attempt to modernise America\u2019s physical infrastructure to addressing climate change, its social infrastructure and social and economic inequality.<\/p>\n

The administration is moving with urgency because it knows that there is a real risk the Democrats will lose their paper-thin Senate majority (held only with Vice-President Kamala Harris\u2019 casting vote) in next year\u2019s mid-term elections.<\/p>\n

It appears that Biden will try to navigate predictably stiff Republican opposition to the tax increases and the climate-related spending in the plan by splitting the package into two or more pieces. Some Republican support could be expected for the upgrading of America\u2019s existing, decaying, infrastructure.<\/p>\n

The administration would then try to use the same budget \u201creconciliation\u201d process that it adopted for is stimulus spending for the rest of the package.<\/p>\n

That would require \u201conly\u201d a simple majority in the Senate, although that\u2019s not straightforward given that some of the more centrist Democrat senators are likely to have reservations about such a big and radical tax-and-spend approach.<\/p>\n

The $US3 trillion cost estimate (over a decade) may be conservative. If the administration were to pursue its agenda aggressively, rather than compromising some elements to appease the moderates in its own party, the bill could top $US4 trillion.<\/p>\n

It is unlikely that the proposed tax increase would fully fund a $US3 trillion program, let alone $US4 trillion, which would necessitate some significant debt funding during a period when the US Treasury is already confronting record funding requirements.<\/p>\n

Federal debt increased by more than 20 per cent last year to more than 100 per cent of GDP, before the Biden stimulus spending.<\/p>\n

The counter argument is that some of the spending will pay for itself, either by generating income, or through productivity gains, or both. The administration believes the green energy and 5G broadband investments will spark private sector investment and create millions of tax-paying jobs.<\/p>\n

<\/p>\n

Republican Senate leader Mitch McConnell has described the Biden plan as a \u201cTrojan Horse\u201d for a raft of progressive policies, including massive tax increases.<\/span>Credit:<\/span>Bloomberg<\/cite><\/p>\n

It is also the case that there has been no better time in modern history for the government to borrow heavily, with US and global interest rates at negligible levels and long term bond rates in the US close to negative, if not actually negative, in real terms.<\/p>\n

The Democrats argue that the plan is an investment in increasing the US economy\u2019s long term growth potential at a time when US economic supremacy is being challenged by China and therefore even if it does increase US debt and deficits it would remain worthwhile.<\/p>\n

The Biden plan is progressive and does go beyond an attempt to modernise America\u2019s physical infrastructure to addressing climate change, its social infrastructure and social and economic inequality.<\/p>\n

To date, despite its scale and scope, it doesn\u2019t appear to be frightening investors or generating much of a political backlash beyond the Republican party, although that could change as Biden fleshes out the detail.<\/p>\n

For the rest of the world, if Biden succeeds in implementing the key elements of the package it would help in alleviating the competitive pressure for corporate tax cuts that the Trump tax cuts fuelled, add massive momentum to efforts to decarbonise the global environment (and to the competition to profit from decarbonisation), probably flow through to higher inflation and interest rates and impact sharemarkets and currencies.<\/p>\n

Whatever happened to \u201cSleepy Joe?\u201d<\/p>\n

Business Briefing<\/h3>\n

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Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cSleepy Joe\u201d may turn out to be<\/p>\n","protected":false},"author":3,"featured_media":118243,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23052],"tags":[],"yoast_head":"\nBiden is anything but sleepy as he puts together radical $US3 trillion spending plan - Pre Coin News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/precoinnews.com\/economy\/biden-is-anything-but-sleepy-as-he-puts-together-radical-us3-trillion-spending-plan\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Biden is anything but sleepy as he puts together radical $US3 trillion spending plan - Pre Coin News\" \/>\n<meta property=\"og:description\" content=\"\u201cSleepy Joe\u201d may turn out to be\" \/>\n<meta property=\"og:url\" content=\"https:\/\/precoinnews.com\/economy\/biden-is-anything-but-sleepy-as-he-puts-together-radical-us3-trillion-spending-plan\/\" \/>\n<meta property=\"og:site_name\" content=\"Pre Coin News\" \/>\n<meta property=\"article:published_time\" content=\"2021-03-24T01:15:49+00:00\" \/>\n<meta name=\"author\" content=\"mediabest\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/precoinnews.com\/wp-content\/uploads\/2021\/03\/ccelebritiesfotof1fa9af130194c0ca44a862af3ce214dc73a1f59.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"mediabest\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/precoinnews.com\/economy\/biden-is-anything-but-sleepy-as-he-puts-together-radical-us3-trillion-spending-plan\/\",\"url\":\"https:\/\/precoinnews.com\/economy\/biden-is-anything-but-sleepy-as-he-puts-together-radical-us3-trillion-spending-plan\/\",\"name\":\"Biden is anything but sleepy as he puts together radical $US3 trillion spending plan - 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