Biden’s infrastructure plan: What does the new $2 trillion bill contain?
The White House is comparing President Joe Biden’s infrastructure proposals with the construction of interstate highways and the space race.
Staff video, “USA Today”
Economists say that President Joe Biden’s $2 trillion infrastructure plan may prevent this year’s projected economic growth from slowing significantly after the COVID-19 decline in 2022, while at the same time promoting it in the long run. Growth and productivity.
Troy Ludtka, an economist at the research company Natixis, said of infrastructure legislation: “This allows the party to move on.”
However, some analysts said that the blueprint may actually hinder the economy in 2022, and then start to accelerate growth in subsequent years. This is because it takes several years for infrastructure projects to be launched, and higher taxes may inhibit both business investment and economic activity.
Biden’s plan will rebuild the country’s roads, bridges and rail services, support clean energy, provide universal broadband and build millions of affordable homes, among other initiatives. Although Republicans are already condemning this legislation, Democrats can seek to pass a budget settlement with a simple majority of the Senate to pass all or most of the legislation, just as they did with the $1.9 trillion COVID relief bill earlier this year.
To pay for most of the plan, Biden proposed to increase the corporate tax rate from 21% to 28%, and the minimum tax rate for US companies to 21%.
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Like many economists, Natixis expects to grow by nearly 7% this year, the highest level since the early 1980s. Although it is still expected to achieve steady growth in 2022, as the impact of government assistance gradually diminishes, the plan will mark a sharp drop in the pace this year.
Biden’s infrastructure plans may help. Economist Ludtka believes that the economy will grow by 3.3% next year, but Biden’s proposal may increase the economy by more than 4%. Gregory Daco, chief economist of Oxford Economics, estimates that the economy will grow by 3% next year, and Biden plans to increase it by another 0.5%.
Although the US$1.9 trillion COVID relief measures have invested billions of dollars in consumers’ pockets and allowed them to spend extravagantly, in the long run, upgrading the country’s infrastructure is aimed at strengthening fragile transportation networks and investing in research and development. Project to increase productivity.
Dakko said: “If the sugar content in 2021 is high, then 2022 is a long-term adaptation training program.”
However, Mark Zandi, chief economist at Moody’s Analytics, said that these projects will not actually begin until 2023. He predicts that from the fourth quarter of 2021 to the fourth quarter of 2022, the economy will only grow by 1.3%, and Biden’s plan will not increase any impact on gains.
Joe LaVorgna, chief economist for the Americas of Natixis, predicts growth of about 3.5% next year, but he believes that Biden plans to reduce growth to less than 3% because higher corporate tax rates will reduce the company’s profits And investment until infrastructure projects start to boost the economy.
Economists say that in a longer period, Biden’s plan will be a huge positive result. Zandi predicts that its growth will increase by about half a percentage point by 2023 and 1.6 percentage points in the second year. He believes that the blueprint will add about 1.4 million jobs in 2024 and 1 million jobs in 2025.
Moody’s data shows that by 2030, the economy will grow by about $700 billion, or nearly 3%, compared to the economy without the upgrade, and there will be 2.7 million Americans working.