Goldman with the note. This is bullish for US growth, inflation and DXY deeper into 2022 and then beyond:
Months after President Biden proposed major new spending programs financed with tax increases, the Senate finally looks poised to act on a bipartisan infrastructure bill and to take the first steps on a broader fiscal package.nIn the next week or so, the Senate looks fairly likely to pass bipartisan infrastructure legislation that boosts spending by $550bn over several years. It includes most of the funding President Biden proposed for transportation infrastructure and other areas like water and broadband. However, it includes much less in the way of clean energy provisions, and omits the rest of the WhiteHouse spending proposal entirely. Although the bill was expected to fully offset the new spending with other budgetary savings, the bill as drafted appears to offset less than half the cost.
Following likely Senate passage of the infrastructure bill, the Senate is then likely to take up a budget resolution that calls for $3.5 trillion in new spending, financed primarily through tax increases and, to a lesser extent, spending cuts. The most important aspect of the resolution, in our view, will be the amount of deficit expansion it allows. Since we believe Democrats are unlikely to agree to more than about $1.5 trillion in tax increases, a resolution that does not allow for any deficit expansion could lead to a smaller spending boost than we assume.
