Biden proposes $2 trillion spending plan and tax hikes.

 

Joe Biden. White House photo.

Joe Biden has proposed a $2 trillion spending plan and will ask for tax hikes. Fox Business. The plan will spend money on roads, bridges, getting rid of lead pipes and expanding broadband internet. In order to pay for this massive spending Biden has proposed raising the corporate tax rate to 28% from 21% and ensure that multinational companies were taxed at 21%. He would also try to remove loopholes in taxes. 

My Comment:

Correct me if I am wrong but I am pretty sure we are in an economic crisis and just spent trillions and Coronavirus relief. I don't think our government can continue to waste money like this. Raising taxes seems like a terrible idea as well and one that could collapse the economy. 

I do agree that our nations infrastructure is in need of repair. But I think that should be the responsibility of state governments, not the federal government. Generally speaking when the federal government spends on infrastructure the states stop spending so there is very little benefit in doing so. 

The tax hike is the biggest problem though. Raising the corporate tax rate means that those costs will be passed onto consumers, which means people will have less money to spend. It could also drive some marginal businesses out of business. I do appreciate that Biden at least is pretending like America is going to pay for this bill, unlike we did for the Covid bills, but it's going to have major repercussions. 

I'm afraid one of those consequences is stagflation. That's when the economy is stagnant at the same time inflation is a problem. The inflation will be due to the Covid relief bills and I have already noticed prices going up. It's happening and I think the worst thing we can do is add on top of that a major economic damage caused by the tax relief. 

And I don't think this will actually provide all that many jobs. Like I said, most of these construction jobs will likely be ones that would exist already due to state spending. Whatever jobs that are created by the bill would be drowned out by job loss due to higher corporate tax rates. 

Will the bill actually pass though? Almost certainly not. I doubt they Democrats will get the 10 votes they need in the Senate to pass this. No Republicans will vote for a tax hike and I think it's possible that a couple of Democrats would defect as well. It will pass in the house but it will never make it past that point. 

But I think the bill will have consequences for the 2022 election. I think a lot of people will remember that Joe Biden and the Democrats tried to raise taxes during an economic crisis for spending on non-critical issues. Given how unpopular Pete Buttigieg's mileage proposal was(and how quickly he walked it back) I think there is zero apatite for any kind of tax hikes right now.