Biden Plans To Invest $400 Billion In Green Projects

 

Following the $1.9 trillion relief plan, the Biden administration has begun to work out its next long-term economic plan.

 

According to three people familiar with the matter, Biden administration officials are working on the next long-term economic plan, which may be as large as $3 trillion, to achieve the key elements mentioned in Biden's campaign platform. The proposal will be submitted to Biden this week.

 

The economic plan may be divided into two parts

 

The latest economic plan is likely to be split into two separate plans, one of which will invest in promoting manufacturing, improving transportation systems, expanding broadband access and reducing carbon emissions.

 

Another plan will reduce economic inequality by investing in paid vacations, universal pre-school education and community colleges.

 

According to CNBC, the Biden administration is inclined to first seek a bipartisan infrastructure bill, and then plan to pass a larger part of the economic package through the budget reconciliation process, which requires only a simple minority vote of Senate Democrats.

 

According to the proposals disclosed so far, the Biden government plans to spend $400 billion on green projects, and nearly $1 trillion on roads and bridges, railways, ports, electric vehicle charging stations, power grids and other power industry facilities. It also involves investment in human capital, including tuition remission for ethnic minorities and health care reform. In addition, the plan will provide funding for the care of children and the elderly.

 

Unlike the $1.9 trillion bail-out bill, the latest long-term economic plan will involve tax increases. The report quoted people familiar with the matter as saying that higher corporate taxes and tax rates on the rich would be at the core of the story.

 

The timing of the economic plan implementation is crucial

 

J.P. Morgan believes that the total amount of the new economic plan seems high, but because it covers 10 years, the amount of annual equal share is relatively small compared with the stimulus plan passed by the United States in the past year, and the annual amount of $200-400 billion is only 1% - 2% of the U.S. GDP.

 

It is worth noting, however, that J.P. Morgan noted that the U.S. economy is almost certainly close to full employment when the new stimulus measures are implemented, which may be similar to the federal spending measures adopted in the United States in early 2018.

 

But JPMorgan pointed out that this may not be a good thing. The measure was passed in early 2018, a month after Trump's tax cuts were passed, and the Federal Reserve accelerated the pace of interest rate hikes in the same year.