US President Joe Biden’s $ 3.5 trillion infrastructure plan will hit the US economy, putting pressure in the long run. Its implementation will cause a sharp jump in the federal budget deficit and a decline in GDP. Fox Bussiness reports, citing a new study.
The adoption of the stimulus package that underpins Biden’s policies could cut GDP by four percent by 2050. In addition, there will be a risk of federal debt growth of about 8.9 percent. Biden’s $ 3.5 trillion plan is expected to be spent over the next ten years. If, after this period, spending continues in this volume, then public debt will grow by 16.4 percent by 2050, and GDP will shrink by 4.8 percent.
The plan calls for significant tax cuts for the middle class, paid parental leave, access to universal preschool education, community colleges, climate change mitigation and expanded health care programs. Funding for the plan will come from tax increases for wealthy Americans and corporations. Legislators are still debating the details.
The issue of adopting the plan caused a split not only between parties, but also within the Democratic Party, to which Biden belongs. “I will not support a $ 3.5 trillion bill or any other level of additional spending without more clarity on why Congress chooses to ignore the serious impact of inflation and debt on existing government programs,” said Democratic Senator Joe Manchin.
On the way to implementing the economic plan, the senator considered it necessary to take into account all factors, including the proposed increase in the corporate tax rate from 21 percent to 28 percent. According to the senator, a moderate increase in the rate to 25 percent will keep the US competitive in the world market. Based on the proposal, Manchin set a range of funding that he would agree to support the plan. “It will be $ 1-1.5 trillion,” the politician said.
His opinion could play a decisive role in the implementation of the plan, given that the US Senate – the upper house of Congress – passed it thanks to the efforts of Democrats, while 50 Republicans voted almost unanimously against. To make a decision, it is required that at least half of the 100 senators vote in favor. At the same time, in the House of Representatives of the US Congress, which approved the plan at the end of August, opinions were almost equally divided. There was not a single GOP member among the supporters of the plan, and the Democrats had disagreements – the Speaker of the House of Representatives Nancy Pelosi fought for a long time with dissenting moderates who opposed the economic plan.
The head of the US Senate Budget Committee, Bernie Sanders, criticized Manchin’s comments but promised to reject the bill if no reconciliation was achieved.
The economic plan forms the backbone of Biden’s policy to help families in the aftermath of the pandemic and to combat climate change. Former US President Donald Trump has called his successor’s proposals “a plan to destroy America.” According to him, the adoption of the plan will lead to higher taxes and higher prices for many categories of everyday goods.