$3.5 trillion spending package could reduce GDP by 4% in 2050
huge, multitrillion-dollar do and expense packages Congress What Democrats are currently crafting, according to a new study, will weigh on the US economy in the long run, widening the country’s deficit and slashing GDP.
The $3.5 trillion measure includes federally funded family vacations, expanding public education, establishing community colleges and combating climate change. It will be paid for by a bevy of tax increases on wealthy Americans and corporations, though lawmakers are still hashing out the specifics.
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Democrats have billed the plan, which is the basis for President Biden’s “Build Back Better” agenda, as a once-in-a-generation investment opportunity – but the proposal could lead to GDP, which is less than that produced in a country. The largest measure of goods and services. , relative to the current baseline, to shrink by 4% in 2050 test result From the Penn Wharton Budget Model, a nonpartisan group at the Wharton School at the University of Pennsylvania.
At the same time, assuming the provisions included in the legislation phase out after the 10-year period, the multitrillion-dollar bill could increase the federal debt by about 8.9%. Democrats have yet to release the legislative text.
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If spending proposals continue indefinitely beyond the 10-year period, government debt is projected to increase by 16.4 percent in 2050, while GDP will shrink by 4.8 percent.
The specifics of the $3.5 trillion package are likely to change before Democrats prepare the final bill, which they plan to pass in the coming weeks with a party-line vote known as budget reconciliation. , which allows them to bypass the Senate filibuster by GOP lawmakers. .
There is a growing divide among Democratic lawmakers over the passage of the spending bill; At the heart of the controversy is the fight for control over the size and scope of the $3.5 trillion plan.
Progressives say $3.5 trillion is the minimum needed to broaden Social Security and tackle climate change. However, centrist Democrats are wary of another multitrillion-dollar bill — funded by a bevy of new taxes, no less — after coronavirus The pandemic pushed the US deficit to a record high. (The US budget deficit reached a record $1.7 trillion in the first half of the fiscal year, and the country’s debt is on track to cross $30 trillion).
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With their thin majority in both houses, Democrats face a delicate balancing act in advancing their so-called “two-track” agenda – approving both a bipartisan deal and a reconciliation package that cost several trillions of dollars. Maybe – or they risk losing support. Moderate or progressive member.
Sen. Joe Manchin, DW.VA, has called for a “pause” in the reconciliation bill and repeatedly said he does not support passing another multitrillion-dollar spending bill.
Other Democrats have criticized Munchkin’s comments; Sen. Bernie Sanders, the chairman of the Senate Budget Committee, also pledged to tank the infrastructure bill unless it is accompanied by a reconciliation measure.