I guess the Biden infrastructure plan requires a comment, albeit not a long one because who knows if it will happen?
First, the plan seems so small. $2 trillion over ten years is much less than is required to make America great again. It will address weaknesses in just ten major bridges, for example. The last time I was in the States it looked like every bridge I saw was falling down.
Second, it seems remarkably ungreen.
Third, Biden will not see it through. Will a successor?
I'd say the Democrats have a lot more to do.
But let's turn to the tax package instead.
First, might I make the obvious point that tax is not going to pay for this spend, whatever happens? The Fed is. It always does. That's the way government works.
Second, no one has said that any of this package will be paid for by the direct tax paid that it will generate. Why not?
Third, nor has anyone said anything about the substantial multiplier effects of such spending which likely mean that this package will more than pay for itself. Again, why not?
Fourth, instead they talk about corporate tax paying for it. It won't. There is no such link.
Raise corporate tax if you think it appropriate for the management of the US macro economy by all means.
Do it to create greater equality, definitely.
Do it to support the credibility of international tax systems, for certain.
Introduce a minimum tax rate to beat tax abuse, for sure.
Use country-by-country reporting to keep me happy, because I promise you will. Do so to beat tax havens, as I always intended when designing that system of reporting, and I am even happier.
But don't say it's to pay for infrastructure, because it isn't. That's not how tax works.
My summary is get the economics right when announcing such things. It would really help.
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Should it be bigger? Yes – but it is quite chunky – the equivalent in the UK would be about £300bn or £30bn a year which exceeds the entire Transport budget (£25bn ish a year) by a wide margin. It is a start and is large enough to ensure that any sensible “ready to go” project is not constrained by money…. and if, the programme is delivering results in 3 to 5 years time, no doubt spending can be increased.
Should corporate taxes rise? Yes – for all the reasons you list. Are the connected? Theoretically and practically – no…. but politically YES.
Like it or not, the American public are not ready to buy MMT so I, for one, will forgive this fiction as a pragmatic solution that might really achieve something.
….. and I also like the fact that that fiscal policy is doing the work which is allowing US rates to drift higher (2.4% on 30 year bonds). Sure, the Fed will still keep buying Treasuries so it is, in effect directly financing the spending…. but allowing market rates to settle at something close to zero in real (inflation adjusted) terms which should go some way to restraining asset bubbles.
I’ll wait until the 100 days are done before dusting off the litmus list that I put up in January. The potus may even do a SECOND press conference with real questions and reporters to show that he is actually compus … It is depressing that most still don’t see through the evidence of the first 50 days and the pig in the poke they yet again bought.
I am with Clive on this – Joe Public will not accept MMT and so getting the investment moving is the important point. Biden can use any soundbites – ‘we can afford to do this’ ‘we cannot afford not to’ ‘we have to get the economy moving’
Hopefully one S Kelton and the like can provide encouragement that keeps this thing moving. Once talk is of available resources – labour (full employment), materials etc. then public perception can be moved to MMT.
It’s really important that whatever Biden does, it can be translated into something that the Trump supporter can see makes a difference to their lives.
My worry is that too much of this will be left to the market to deliver – and that this will not make people’s lives better because many need decent jobs. It has to be a new New Deal in the way it is delivered.
Third, nor has anyone said anything about the substantial multiplier effects of such spending which likely mean that this package will more than pay for itself. Again, why not?
Question for you Mr Murphy, If that’s true then why is there a national debt?
Because we choose to have a national debt
And we have under invested in productive activity
And over invested in poor activity e.g. defence
I note you have of late been Tanya, Matt, Stacey and Ben
Interesting….
$2 trillion over ten years will “address the weaknesses in ten bridges”?
How much do you think it costs to repair a bridge? Hint: the entire Channel Tunnel cost $25bn.
You’re an accountant. How can you get numbers so badly wrong?
This is why nobody takes you seriously outside a small cult of anti-capitalist activists and desperately confused Scottish nationalists.
For heaven’s sake stop being stupid
No one who read that thought this was only about bridges, except you
I was illustrating its lack of ambition
You illustrated how crass you are
The plan doesn’t repair ten bridges; it repairs ten *thousand*.
https://www.reuters.com/article/us-usa-biden-infrastructure-factbox/whats-in-bidens-23-trillion-infrastructure-plan-idUSKBN2BN13T
It’s hard to tell with you whether it’s laziness or deliberate misrepresentation.
I quoted a story
It only deals with ten major bridges
It’s called honesty
You won’t know what that is