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Original Title: Biden Announced $ 13 Billion “Money Toss Plan!” Nine major industries, including manufacturing, are the biggest bright spot in rain and dew.
According to CCTV News, on March 31 local time, United States President Biden delivered a speech in Pittsburgh, Pennsylvania, and announced a $ 2 trillion (13 trillion yuan) infrastructure plan. The eight-year plan is part of the Biden-Harris administration’s “Build Back Better” plan, which aims to rebuild America’s aging infrastructure, promote electric vehicles and clean energy, and create jobs.
Biden said the infrastructure plan includes two parts: employment and family, also called the “America’s Employment Program,” which will be “an investment that can only be seen once in a generation.” The new corona epidemic has worsened the economic divergence and has become increasingly obvious. It’s time to rebuild the economy from the bottom up and help the middle class get out of trouble. Plans for American families will be discussed in the coming weeks.
To fund the plan, the Biden government plans to increase the corporate tax rate from 21% to 28%. Biden said that people with an annual income of less than $ 400,000 will not be subject to additional federal taxes and “no one should complain that the United States has increased the corporate tax to 28%.”
In addition, Biden proposed to invest $ 174 billion in the electric vehicle industry. Specific measures include rebates and tax incentives for car buyers to encourage American consumers to buy electric vehicles. At the same time, the Biden government plans to build 500,000 electric vehicles by 2030. Car charging pile.
This plan boosted the electric car industry, and Tesla closed up 5.08% on Wednesday and its market value increased by $ 31 billion overnight.
At the same time, technology stocks rose. Among FAANMG’s top six technology stocks, Facebook was up more than 2%.AppleIt closed almost 1.9% higher, Microsoft closed almost 1.7% higher.
Where is the $ 2 trillion spent?
Where will a whopping $ 2 trillion be spent? The details of the plan are reportedly as follows:
US $ 1. 621 billion: used to repair and modernize bridges, roads and highways; expand and modernize the public transportation system; invest in electric vehicles; improve the rail system; improve ports, water transport and airports.
2. $ 300 Billion: Rapidly Enhance US Manufacturing Capabilities and Strengthen the US Supply Chain.
3. 111 Billion US Dollars: Replace (including) existing lead water pipes and tap water supply lines to ensure safe drinking water and improve tap water infrastructure.
4. $ 100 billion is used to expand high-speed network connections.
5. $ 100 billion will be used to build a more flexible power supply network.
6. US $ 213 billion: produce, protect or renovate 2 million “affordable and sustainable” housing units to solve the problem of housing shortage.
7. $ 100 billion is used to build or improve public schools.
8. $ 180 billion will be used for cutting-edge technology research and development.
9. US $ 100 billion will be used for employment development programs.
To avoid errors in the translation process, the editor attaches the original report in English at the end of the article and interested readers can compare and view it.
Biden used $ 100 billion to build a more resilient electrical grid and proposed extending preferential tax policies for wind, solar, and other renewables projects for 10 years, requiring more electricity to come from low-carbon energy, and the goal is to eliminate the electricity grid by 2035 Carbon emissions.
Where does the money come from?
Raise taxes on businesses and the rich
The US Congressional Budget Office previously estimated that the federal budget deficit in fiscal year 2021 could reach $ 2.3 trillion. If the $ 1.9 trillion economic rescue plan approved in March is included, this figure may rise by another $ 1.16 trillion. The expensive infrastructure projects mentioned above are expected to further increase the debt pressure of the federal government.
So where does this money come from?
The Biden administration hopes to fill the funding gap through taxes. According to previous reports, Biden’s tax increase plan will primarily include:
The largest amount of tax increases comes from corporate income tax, and the corporate income tax rate will increase from the current 21% to 28%. According to data from the Tax Policy Center, this will add $ 730 billion in taxes to the US government within 10 years.
The second element is to increase the lowest corporate tax rate in the world, which can generate $ 550 billion in revenue for the United States government over the next ten years.
Tax increases on capital gains of the wealthy and unrealized capital gains at the time of death are expected to generate $ 370 billion in revenue for the United States government.
Raise the maximum personal tax rate for those earning more than $ 400,000 to 39.6% before Trump’s tax cuts reach $ 110 billion in taxes over the next ten years.
Overall, Biden’s tax increase plan is expected to generate about $ 1.8 trillion in additional revenue for the United States government over the next ten years.
Difficulties in cashing “infrastructure checks”
However, for Biden’s “infrastructure check” to be cashed, he needs to overcome layers of hardship.
First, there are roadblocks in the congressional legislative process, Senate Republicans will not pass Biden’s proposal.
After the US Congress passed the $ 900 billion economic rescue bill in December last year, Republican leaders in Congress have hinted that they do not want to introduce a new round of large-scale economic rescue plans.
However, in March of this year, Democrats did not get the Republicans’ approving vote, relying on Vice President Kamala Harris’s decisive vote as Speaker of the Senate, and arbitrarily sent a $ 1.9 trillion economic rescue plan. Dollars. desktop to take effect.
The Democratic and Republican parties each have 50 seats in the Senate. Once the two parties reach a tie in the vote, the vice president, as president of the Senate, will cast a deciding vote in favor of “mediation.” It has raised concern whether the Democratic Party’s massive infrastructure project will again bypass the Republican Party and rely on “mediation” to cross the border.
The Xinhua news agency quoted the Associated Press as reporting that senior advisers to Democratic Senate Leader Chuck Schumer said Democrats could use this rule again. That will be the second “mediation” of the United States Congress in a fiscal year, which is very rare. Under normal circumstances, only one “mediation” in a fiscal year or two “mediations” in a calendar year.
The second obstacle comes from the local government.
According to the analysis of the China Financial Research Report, the traditional infrastructure of the United States is mainly invested by local governments, and the current financial pressure from local governments is high, and the capacity and willingness of infrastructure investment is doubtful . Investment in infrastructure has strong local attributes, and the investment and main beneficiaries are also local. In 2019, US infrastructure investment accounted for 68% of local government investment, and federal government investment accounted for only 6%. From a structural point of view, traditional infrastructure such as roads, transportation, and water and electricity accounts for a very low proportion of federal government infrastructure investment, which is mainly concentrated in local government infrastructure investment. Today, under the impact of the epidemic, the financial pressure on local governments in the United States has increased dramatically. In March’s $ 1.9 trillion fiscal stimulus package, up to $ 350 billion was used to rescue local finances. It is highly uncertain whether local governments have the capacity and willingness to cooperate with the federal government in the implementation of infrastructure projects.
State and local governments accounted for 68% of US infrastructure investment in 2019
Image source: CICC Dotting the Eye
Is the American infrastructure really that bad?
So is the US infrastructure really so bad that it needs a large-scale rebuild?
Huachuang Securities Research reported that the current state of infrastructure in the United States is worrying and large-scale investments are badly needed. Most infrastructure systems in the United States were built in the 1960s, and many facilities have reached their maximum useful life and are approaching the “retirement” point.
In 2017, the American Society of Civil Engineers (ASCE) rated US infrastructure as “D +” (AF level), and in 2021, the rating was updated to “C-“. Although the rating has improved, it also shows that the US infrastructure is still “mostly substandard”, showing a more serious “deteriorating” situation. From a global comparison, the US infrastructure sector rating has also been declining over the past two decades. According to the World Economic Forum’s Global Competitiveness Report, the United States ranked 13th in the world in infrastructure in 2019, while it ranked 5th in 2002 and fell 8th in 17 years.
The 2021 report by the American Society of Civil Engineers believes that the total US infrastructure investment gap in the next ten years has reached $ 2.59 trillion. If it does not recover, the US will lose US $ 10 trillion in GDP and US $ 2.4 trillion in exports by 2039. A 2016 study by McKinsey believes that from 2017 to 2030, an annual investment in $ 150 billion infrastructure to keep up with the infrastructure demand of the US economy.
It is worth noting that the research report noted that European countries’ spending on infrastructure construction and maintenance is equivalent to 5% of GDP, while China’s infrastructure spending represents on average about 8% of its GDP, while US spending is only 2.4%.
Investment in US infrastructure as a percentage of GDP
Image source: CICC Dotting the Eye
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