Biden stimulus not a dud

Advertisement

Morgan Stanley with a note that I agree with:

In our view, the announcement of a bipartisan infrastructure plan doesn’t augur a more modest price tag for fiscal spending. Rather, it underscores that the fiscal policy is better described as ‘all or nothing’. We note that several key Democratic Senators have already described their support for the bipartisan plan as conditional on the coincident passage of a larger, Democrats-driven reconciliation package that would include environmental, social, and tax provisions. This process would also, in our view, fold in much of the planned spending that does not have sufficient backing to be included in the bipartisan plan. This dynamic linking the partisan and bipartisan efforts into a simultaneous ‘dual path’ strategy drives a key observation: no deal is likely without it adding up to a more sizeable deal overall vs. the reported bipartisan proposal. Hence, our base case for deficit expansion and tax changes remains, but risks are skewed toward in action.

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:
Cancel at any time through our billing provider, Stripe
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.