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Biden’s infrastructure plan: what’s in the new $ 2 trillion bill?
The White House compares President Joe Biden’s infrastructure proposal to building interstate highways and the space race.
staff video, USA TODAY
President Joe Biden’s $ 2 trillion infrastructure plan could prevent this year’s expected economic blessing from slowing dramatically in 2022 in the wake of the COVID-19 slowdown, while boosting long-term growth and productivity, according to economists.
“This allows the party to continue,” says economist Troy Ludtka of research firm Natixis of the infrastructure legislation.
Some analysts, however, believe that the master plan could actually hamper the economy in 2022 before starting to accelerate growth in later years. Indeed, infrastructure projects will take a few years to unfold, while higher taxes could dampen business investment and economic activity in the meantime.
Biden’s plan is said to rebuild the country’s roads, bridges and rail service, support clean energy, provide universal broadband, and build millions of affordable homes, among other initiatives. Although Republicans are already denouncing the legislation, Democrats could seek to pass it in whole or in large part with a simple majority vote in the Senate through a budget reconciliation, as they did with the bill. $ 1.9 trillion COVID relief bill earlier this year.
To pay for much of the plan, Biden is proposing to raise the corporate tax rate to 28% from 21% and raise the minimum U.S. corporate tax to 21%.
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Like many economists, Natixis expects growth of nearly 7% this year – the strongest since the early 1980s – as coronavirus vaccinations spread and Americans are bursting with cash from the economy. Federal aid is resuming regular life in large numbers. While solid growth is still expected for 2022, the plan will mark a substantial setback from this year’s pace as the effects of government assistance wear off.
Biden’s infrastructure plan could provide a boost. Economist Ludtka estimates the economy will grow 3.3% next year, but Biden’s proposal could push growth to more than 4%. Gregory Daco, chief economist at Oxford Economics, estimates that the economy will grow by 3% next year and that the Biden plan will increase by an additional half a percentage point.
As the $ 1.9 trillion COVID relief measure puts billions of dollars in the pockets of consumers so they can splurge, modernizing the country’s infrastructure aims to increase long-term productivity by strengthening crumbling transport networks and investing in research and development projects, for example.
“If 2021 is the high blood sugar, 2022 is about a training plan to be in shape for the long term,” says Daco.
Still, Mark Zandi, chief economist at Moody’s Analytics, says projects won’t start in earnest until 2023. He expects the economy to grow only 1.3% from Q4 2021 to Q4 2022. , the Biden plan adding nothing. to earnings.
Joe LaVorgna, chief economist of the Americas for Natixis, predicts growth of around 3.5% next year, but believes the Biden plan could push growth below 3% as corporate tax rates higher prices reduce corporate profits and investment until infrastructure projects start to stimulate the economy.
Over a longer period of time, Biden’s plan would be a big positive, economists say. Zandi expects him to add around half a percentage point to growth in 2023 and 1.6 percentage points the following year. The master plan, he estimates, would add around 1.4 million jobs in 2024 and 1 million jobs in 2025.
By 2030, the economy would be about $ 700 billion, or nearly 3%, larger than it would be without the upgrades and an additional 2.7 million Americans would be working, figures show by Moody.
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