All eyes are on President Joe Biden on Wednesday as he is set to unveil his more than $2 trillion infrastructure package. The plan aims to revitalize U.S. transportation infrastructure, water systems, broadband, manufacturing, and more. But the kicker is the president wants the nation’s corporations to pay for it, which would include a corporate tax rate of 28%. However, the plan also includes funding for disabled Americans, building and retrofitting affordable housing, and upgrading schools. White House officials said the spending would span eight years and generate millions of new jobs as the country shifts from fossil fuels and combats climate change.
President Biden will unveil his $2 trillion infrastructure plan today – here are the details
President Joe Biden will unveil a more than $2 trillion infrastructure package on Wednesday as his administration shifts its focus to bolstering the post-pandemic economy.
The plan Biden will outline Wednesday will include roughly $2 trillion in spending over eight years and would raise the corporate tax rate to 28% to fund it, an administration official told reporters Tuesday night, speaking on condition of anonymity in advance of the announcement.
The White House said the tax hike, combined with measures designed to stop offshoring of profits, would fund the infrastructure plan within 15 years.
The proposal would:
- Put $621 billion into transportation infrastructure such as bridges, roads, public transit, ports, airports and electric vehicle development
- Direct $400 billion to care for elderly and disabled Americans
- Inject more than $300 billion into improving drinking-water infrastructure, expanding broadband access and upgrading electric grids
- Put more than $300 billion into building and retrofitting affordable housing, along with constructing and upgrading schools
- Invest $580 billion in American manufacturing, research and development and job training efforts
The announcement will kick off Biden’s second major initiative after passage of a $1.9 trillion coronavirus relief plan earlier this month. In the new move, the administration aims to approve a first proposal designed to create jobs, revamp U.S. infrastructure and fight climate change before it turns toward a second plan to improve education and expand paid leave and health-care coverage.
Through the plan announced Wednesday, the White House hopes to show it can “revitalize our national imagination and put millions of Americans to work right now,” the administration official said.
The White House plans to fund the spending by raising the corporate tax rate to 28%. Republicans slashed the levy to 21% from 35% as part of their 2017 tax law.
The administration also wants to boost the global minimum tax for multinational corporations and ensure they pay at least 21% in taxes in any country. The White House also aims to discourage firms from listing tax havens as their address and writing off expenses related to offshoring, among other reforms.
Read more about the plan, here.
The stock market could double by 2030 because COVID has ‘utterly changed’ the policy environment: analyst
What’s a stock-market prognosticator to do when the S&P 500 index hits his 10-year target — but does so with 8 1/2 years still on the clock?
That was the conundrum faced by Inigo Fraser-Jenkins, co-head of the portfolio strategy team at Bernstein Research, as the S&P 500 SPX, 0.46% advanced on the 4,000 level — the target he had put in place in 2019 for the S&P 500 to hit by the end of the current decade.
Making the dilemma more interesting, Bernstein’s Alla Harmsworth, also co-head of the portfolio strategy team, in 2019 had called for the large-cap benchmark to end the decade at 8,000.
“Of course, having got to 4,000 doesn’t necessarily mean that I have lost the argument. But the idea that the nominal level of the S&P will be the same eight-and-a-half years hence seems too horrible an outcome to countenance,” Fraser-Jenkins wrote.
The more important point, he said, is that it’s likely “too horrible for politicians and other policy makers to countenance, at least if they want to persist in the notion that individuals need to carry the risk of saving for their retirement,” he wrote. “Thus, given those alternatives, I find it easier to accept that I was wrong, so I am belatedly changing my view to agree with that of my colleague and taking 8,000 as our S&P target for the end of the 2020s.”
The S&P 500 hasn’t cleared 4,000 just yet, but it’s come close, finishing at a record 3,974.54 on Friday. On Tuesday, the index fell 0.3% to close near 3,959. The Dow Jones Industrial Average DJIA, 0.28% shed around 103 points, or 0.3%, a day after eking out a record close of its own, while the Nasdaq Composite COMP, gave up 0.1%.
Fraser-Jenkins argued that the policy environment has “utterly changed” as a result of the COVID-19 pandemic. Not all of those changes will be positive for equities, “but the most important point is that for the first time in at least a decade there is a plausible case for inflation,” he wrote.
Read why he says moderate inflation would be positive, here.
Coronavirus pandemic to shave 3% off global output in medium term – IMF
Global economic output is expected to be about 3% lower in 2024 than projected before the COVID-19 pandemic but its medium-term impact won’t be as severe as that of the global financial crisis of 2008-09, the International Monetary Fund said on Wednesday.
The IMF said the prospects for “scarring” from the current crisis remained substantial, even if systemic financial stress and the associated long-lasting economic damage had been largely avoided due to the unprecedented policy actions taken.
The path to recovery remained challenging, especially for countries with limited fiscal resources, the IMF said in a blog post based on its updated World Economic Outlook.
“Unlike what happened during the global financial crisis, emerging market and developing economies are expected to have deeper scars than advanced economies, with losses expected to be the largest among low-income countries,” it said.
Economies that are more reliant on tourism or have a larger share of high-contact sectors such as restaurants and retail trade, are projected to have more persistent losses, it said.
This was true for the Caribbean or the Pacific Islands, with gross domestic product in the latter estimated to be 10% lower in 2024 than pre-pandemic projections, the IMF said.
Read more about the pandemic’s impact on the labor market, here.