Biden's stimulus programme: a blueprint for Europe?
Joe Biden's Covid relief bill measures will cost 1.9 trillion dollars, and now another two trillion dollar economic stimulus package is to follow, including schemes for increased welfare benefits, climate protection and the renovation of dilapidated infrastructures. Biden aims to finance the plan with the country's first major tax hike in 30 years, with above all the rich and businesses having to pay more.
Rethinking economic orthodoxy
Europe should take inspiration from Biden's plans, To Vima says:
“Biden isn't Roosevelt, but he wants to increase public spending, put money into infrastructure and raise workers' wages and corporate taxes. In other words, he opposes what has been presented to us in Europe for years as economic 'orthodoxy'. An 'orthodoxy' that translates into constant austerity, cuts in public spending, treating wages only as a cost and playing down the need for even a little redistribution. ... An 'orthodoxy' that has had many negative consequences in the last decade and led to the destructive logic of the 'austerity memoranda'.”
EU still needs to learn how to distribute money
Público also hopes that Europe will follow the US's example:
“Europe may be satisfied with its 'bazooka', but the American response to the crisis is a 'tank' that seems much more effective. ... Biden's programme is superior to the European bazooka above all in terms of implementation. It makes sure the money goes to families and businesses. In Europe, on the other hand, the problem lies not in the dimensions of the programme, but in its practical implementation. The 750 billion euros will be deployed within a framework of regulations that restricts their use. The best example is the 350 billion euros of the Next Generation EU programme that are available in the form of a loan, but which none of the member states are using.”
New recession is predestined
The financing model of Biden's aid programme could put its effectiveness at risk, economist Éric Chaney warns in Telos:
“The increased tax rates could push down profits by five to ten percent, depending on the sector. ... [This] can only have a negative impact on their investments and innovation potential, which is obviously not what the plan aims to achieve. ... The political orientation of the stimulus package and its financing by businesses could reduce its positive impact in the long term. The recession of 1937-1938, which began four years after the launch of the New Deal and which some attribute to premature budget cuts but others link to the Roosevelt administration's excessive zeal for control and regulation, seems long forgotten.”
A small revolution
Long underestimated, Joe Biden is making a strong impact as president, Politiken writes impressed:
“Biden has not only managed to get the Covid vaccinations done even faster and more effectively than promised - he is also about to start a small revolution in US politics. First he steered a historically large stimulus package through Congress, and then [last] week he presented his infrastructure plan: a gigantic project to rebuild the US's worn-out transport sector, financed by higher corporate taxes and tax hikes for the richest. ... Where Reagan made the state the enemy, Biden is reminding Americans that the state is often the solution. ... Already Biden is showing that he could be far more than an interim solution. If he continues his fight, he could make a stronger mark as president than Obama or Clinton.”
Keynesianism is back
Biden is reactivating a model that has worked before, the left-wing Avgi writes in delight:
“The two support packages for the economy, employees, companies, infrastructure as well as national and federal services have all the characteristics of the New Deal of the interwar period, and in many ways larger dimensions. ... Biden's plan has done away with all of the post-modern accessories and reverted to classic Keynesianism, with the state being the ultimate employer, but also banker, contractor, supplier, manufacturer and customer. ... Biden is making good on a promise that Trump didn't keep: He's trying to make America great again.”
Poison for the Republicans
Biden's coronavirus aid package is far from being done and dusted, Kauppalehti points out:
“To finance his plans, Biden wants to significantly increase taxes for companies and the rich. Corporate tax will rise from 21 to 28 percent. A minimum tax is also planned to rein in companies that benefit from tax havens and other tax loopholes. In his speech, Biden specifically named corporations like Amazon that pay almost no taxes in the United States. Another question is whether Biden's proposals will get through Congress. Tax hikes are poison for Republicans. Even for many moderate Democrats they are a radical step, and the Democratic majority in Congress is pretty thin.”