The Washington Post has reported that later today the White House will unveil plans to spend USD2.25tn on a jobs and infrastructure package that will over the next 8 years be the cornerstone of President Biden's economic agenda. The plan is said to include about USD650bn to improve and rebuild the US’s infrastructure. Additionally, USD300bn will be spent on housing infrastructure and the same amount to help revive U.S. manufacturing.
However, there are two big differences between this package and the recent USD 1.9tn Covid relief bill. The first is how it's going to be paid for. It is expected that plan will be with tax hikes, including a rollback of much of Trump’s 2017 tax policies. Biden will outline an array of tax proposals, including a raise in the corporate rate from 21% to 28%, which according to the Tax Policy Centre, is worth USD730bn over the next 10 years.
The second is this plan will face a lot more competing priorities, both political and fundamental. The spending on the Covid relief bill was seen as a national emergency, needed to fight an ongoing pandemic. However, it looks like this package will draw more lines in the sand from various parties with differing interests on both sides of the house. It's already been reported that three Democrats say they won't support any of Biden's tax hikes to fund his proposals unless the plan includes a repeal of the $10k cap on state and local tax deductions. The GOP passed a cap of $10k on state and local tax (SALT) deductions to pay for their 2017 tax giveaway.
Also, the numbers in the Archegos Capital Management scandal keep getting bigger. Analysts at JP Morgan now think the implosion of Bill Hwang's trading empire could trigger USD10bn of losses across the financial system. Credit Suisse's losses alone could reach up to USD3.5bn, whilst Nomura’s losses are estimated at USD2bn.