Biden can’t stop, and the world has to guard against it!
In order to boost the economy and compete with China, Biden has worked hard. No, not long after the $1.9 trillion COVID-19 bailout bill was passed, he wanted to build large-scale infrastructure, and it was $2.3 trillion at first.
However, the United States, the world’s largest "landlord", has no surplus food. Such a large sum of money can only be taken from the rich and enterprises in the United States, but how can the rich allow the new president to "operate on them"?
On April 1st, McConnell, the minority leader of the US Senate and a Republican, released malicious words to lead the Republican Party to fight to the end.
On April 1st, McConnell was interviewed by the media in Kentucky. Source: dailymail
But Biden has made up his mind and hopes that Congress will approve this $2.3 trillion infrastructure plan this summer. However, even if the cakes of the rich and enterprises are moved, this huge sum of money is still not enough.
Where did the rest of the money come from? More importantly, is this plan a revival or a trap for the United States and the world?
Want to bully the bow again?
After Biden announced his ambitious infrastructure plan, US stocks soared, and the S&P 500 index broke through the 4000 mark for the first time in history with the help of technology stocks.
But not everyone welcomes this new plan.
"Personally, I like Biden. I mean, we were friends for a long time." But this does not affect McConnell’s position on the infrastructure plan. After comparing Biden’s infrastructure plan to a "Trojan horse" with a hidden crisis, McConnell again rejected the new proposal of "old friends" on April 1. He said that the government did not get the authorization of voters, and then increased taxes on enterprises and the rich with annual incomes exceeding $400,000.
"My view on infrastructure is that we should build affordable infrastructure, instead of hitting the economy by substantially increasing taxes and not increasing the burden of national debt." McConnell said.
"There are huge differences between us, which makes it more and more difficult for us to reach a consensus." He said that Biden’s infrastructure plan will not be supported by any Republican senator. This means that if Biden wants to push the plan through, he must ensure that the Democratic senators are United enough and do not run for one vote.
Is it so yellow? Xu Mingqi, a distinguished researcher at Shanghai Institute of International Finance and Economics and vice chairman of Shanghai International Economic Exchange Center, believes that it is still possible for the Democratic Party to push the $2.3 trillion infrastructure plan through.
According to American media reports, it seems that the Democratic Party does not intend to bite the hard bone of the Republican Party. Instead, it plans to stage the scene of pushing the $1.9 trillion bailout bill again, start the legislative process of "budget coordination", bypass the Republican Party, and pass legislation by a simple majority.
Where did so much money come from?
Biden and the Democratic Party, who are eager to get the $2.3 trillion infrastructure plan approved this summer, have started the "I don’t listen, I don’t listen, I don’t listen" mode.
However, in addition to the Republican Party, there are also public opinions from all walks of life who question Biden.
Most Americans think that investing in infrastructure is right, but there are many disputes about the source and destination of funds. Source: GJ
Where the money comes from is a serious problem.
The Wall Street Journal shouted "Biden tax is coming". Although Biden did not specify whether the "annual income exceeding $400,000" was aimed at individuals or families, the commentary said that "the middle class in the United States will bear the largest tax increase since 1968".
Biden tax is coming. Source: wsj webpage screenshot
For American companies that have enjoyed the "welfare" of large-scale tax reduction since 2017, it is even more unacceptable to increase the federal corporate income tax rate from 21% to 28%, increase the minimum tax rate of overseas profits of American companies from 10.5% to 21%, and reduce the tax breaks enjoyed by fossil energy companies.
However, the tax increase is not enough to offset Biden’s self-proclaimed "unparalleled in the world" and "once in a generation" infrastructure costs. According to the calculation of Schneider, an analyst at Cornerstone Macro Consulting, the infrastructure plan will also lead to a cumulative increase of about 500 billion US dollars in the US fiscal deficit.
The federal government’s fiscal deficit, which has soared year after year, makes people worry about the risk of subprime mortgage crisis.
As long as "trillion" can recover?
"How did Biden become a president with a dollar sign ($)?" A commentary on the American political news network wrote, "But when all the money is spent, will anyone really feel the change?" Both the author of this article and the British newspaper The Guardian believe that Biden’s infrastructure plan may, in the end, be like the economic stimulus policy during the Obama administration. At first, he made lofty words with great ambition, but in the end, he "didn’t leave too many traces".
Of course, "change" will still happen, but it may not be the kind that Biden and Democrats want.
The American media pointed out that Biden’s new plan seems to create millions of jobs for the United States, but the substantially increased corporate tax rate will force enterprises to pass on costs.
At the same time, Americans themselves are not sure about the stimulus effect of infrastructure projects on the economy. Willcocks, who once led the domestic economic department of the Federal Reserve and served as a senior adviser to the chairman of the Federal Reserve, said that paying for infrastructure costs by "robbing the rich" would "greatly reduce the economic growth potential". Some economists believe that economic recovery in the post-epidemic era is a long process, and artificially stimulating the economy may lead to overheating, trigger a new round of inflation, and make consumer goods prices rise, the yield of long-term US government bonds rise, and even financial turmoil. In the end, ordinary Americans will be forced to pay for all the consequences.
Faced with these concerns, the Federal Reserve said that the government would effectively control the price increase, but former US Treasury Secretary Summers expressed doubts. In an interview with Bloomberg, he said that the hyperinflation experienced by the United States in the 1970s is no different.
Former us treasury secretary summers. Source: businessinsider
As for the impact of Biden’s "drastic measures" on the global economy after the $1.9 trillion rescue bill, Xu Mingqi said that due to the demand for infrastructure raw materials in the United States, it may play a certain role in pulling the global economy and promoting China’s export of related raw materials to the United States.
However, it is worth noting that inflation in the United States has started and negative economic effects have emerged, which will bring significant spillover effects and have a negative impact on the global economy.
Georgieva, managing director of the International Monetary Fund, recently warned that the accelerated economic recovery in the United States may lead to a rapid increase in interest rates, which will lead to a sharp tightening of the global financing environment and a large amount of international capital flowing out of emerging and developing economies. This will especially bring serious challenges to middle-income countries with huge external financing needs and high debt levels.
And global price increases will also be inevitable. The rising prices of oil, steel, nonferrous metals and other commodities will be transmitted to the downstream, which will lead to the general increase of household appliances and construction machinery, and the pressure of imported inflation faced by some economies will also increase.
This is not all. According to the US Political News Network, a $2 trillion money-throwing plan focusing on education and medical care is still on the way. Even so, some Democrats are still disgusted that the scale of money-throwing is not large enough.
Rep PraMilla Jayapal, a Democrat, thinks that the scale of the infrastructure plan should be even larger. Source: wsj
It seems that Biden can’t stop and the world has to guard against it.
