The Senate passed a $550 billion infrastructure plan that would represent the largest spending boom on U.S. public affairs in decades and sent the bill to the House of Representatives, where some Democrats opposes the plan. The infrastructure plan, which occupies the first place in Biden’s economic agenda, passed the Senate as 69-30 with bipartisan support; The project will cover roads, railways, water and energy networks, and internet infrastructure. Passing the package through HoR is important as it paves the way for a larger $3.5 trillion plan to pass. The HoR is on recess until September 20, while the bill faces some obstacles in terms of majority of votes. Some representatives do not want to vote on the infrastructure bill until the Senate budget package is passed.
If we look at the content of the infrastructure package; It includes approximately $110 billion for roads and bridges, $73 billion for power grid upgrades, $66 billion for rail and Amtrak, and $65 billion for broadband expansion. It also provides $55 billion for clean water and $39 billion for transportation. The Congressional Budget Office said the infrastructure law would add $256 billion to the federal budget deficit over the next decade. This will mean additional borrowing. It also means growth and increased revenue for companies. On the other hand, the demand for iron, steel, copper and the majority that it will create in a tight market will trigger inflation.
Biden’s broader $3.5 trillion package will be aimed at overhauling policies in climate change, taxes, healthcare, immigration and other areas. The Biden administration and Democratic leaders want to pack this plan, which will move forward after the August holiday, with tax increases that the wealthy and corporations will pay for spending on a broad social agenda, including childcare and middle-class tax breaks. Democrats have voted against a debt limit increase as part of their budget plan, with only Democratic votes. Instead, they could try to force Republicans to help raise the limit by adding a mandatory bill to keep the government open after September 30.
While the infrastructure package passes the Senate stage and puts the HoR stage on hold; The most critical development today will be the CPI in the USA. Inflation remains under high pressure both from factors such as consumption and income growth, and from the effect of tightness in supply. It is very likely that the Fed will slip a little more in reducing asset purchases. However, since they are advancing within a dynamic plan, they will enter the action part at a time when they see more signs. Factors such as supply problems, transportation costs, pandemic items still inflated, housing market due to low rates are sources of intense pressure. As a matter of fact, even if the pandemic items are out of the equation, we will see an inflation higher than the Fed’s wishes for a while. Jackson Hole or the September Fed meeting will be critical junctures.
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Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
