The White House’s intention with this package is not to help families and businesses to endure the crisis in the short term (this is done with the first Biden plan), but to reshape the US economy within eight years, through public investment that responds to challenges such as weak infrastructure, climate change and an aging population.
The plan, says the Biden Administration in a summary of the proposal quoted this Wednesday by various media outlets, “is going to invest in America in a way it has not invested since interstate highways were built and the race to win was won. space”.
For transport infrastructures, US $ 650 billion will be channeled, which will, according to the proposal, allow the modernization of more than 30 thousand kilometers of roads and around 10 thousand bridges. Part of this money (around 170 billion) will also be used to invest in public road and rail transport, with US $ 174 billion still going to stimulate the manufacture and purchase of electric vehicles.
Then another $ 650 billion will be allocated to infrastructure related to housing and social welfare, including $ 100 billion for the construction of schools. The plan aims to replace all of the country’s water distribution infrastructures and expand internet coverage to the entire country.
The plan will also invest US $ 400 billion in the care of the elderly sector and US $ 580 billion in research and training in the industry.
Unlike the pandemic emergency plan, which was essentially financed through public debt, this time the Biden administration intends to pay most of the public investment effort by charging more taxes.
The main tax measure associated with the plan is the increase in the corporate tax rate from 21% to 28%, with the imposition of a minimum percentage of income that companies have to declare and the elimination of a series of exemptions currently foreseen. in the law for companies, in what constitutes an almost complete reversal of the tax package applied by the previous president.
The White House is still confident that the plan will have a positive impact on GDP of 0.5% each year, which will contribute to the increase in corporate revenues.
If Biden’s previous plan has already encountered serious difficulties in passing through Congress (in the Senate the vote was split between the 50 Democrats and 50 Republicans, with the vice president’s tiebreaker allowing approval), now the accounts are still pending. should prove to be more complex.
An investment plan of this magnitude constitutes a significant turning point in the economic policy followed by the United States in recent decades, a period in which the role of the State as an inducer of economic growth has been viewed with great suspicion.
In addition, the debate over the balance of public finances and the inflationary pressures created by such large budgetary stimuli has been rising in tone, with some Democratic members of Congress threatening to abandon the line advocated by the president.
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