Wednesday, June 2, 2021

President Biden’s New Deal Budget Helps All of US

 Financial FAQs

President Biden’s $6 trillion 2021-22 budget proposal would rebuild America’s infrastructure and social safety net, supporting those essential workers that need it the most.

“It also represents the most substantial expansion of the federal government’s spending powers since World War II and a direct rebuttal of the small-government principles of his Republican, and even many Democratic, predecessors,” reports VOX.

Then why are 24 states terminating the additional $300 per month payments early that Biden’s American Rescue Plan has extended until September, reports NY Times Binyamin Appelbaum?

The simple truth is that red states are suppressing any additional aid for their workers as much as possible in keeping with their small government principles. Why else give up $26 billion that will flow to them if they allow their workers to keep the additional benefits?

It is also a sign that Republicans will oppose President Biden’s new budget, which is really his ‘new’ New Deal that scares the daylights out of conservatives because it will show that government can work for all Americans, not just the wealthiest as it has over the past 40 years.

Biden’s budget proposal includes the $2 trillion American Jobs Plan — which would embrace an expansive definition of infrastructure, not only to modernize America’s road and bridges, but to invest in broadband and elder care — and a $1.8 trillion American Families Plan, which would establish free higher education and expand child care, health care, and tax benefits for needy families.

“As proposed, the budget would reinvest in infrastructure and education, raise taxes on the wealthy and corporations, and meet many — but not all — of Biden’s campaign promises,” says VOX.

This is happening while Federal Reserve and private banks are predicting and even bigger growth spurt ahead in coming quarters.

The Atlanta Fed has just updated their second quarter growth prediction, for starters:

“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2021 is 10.3 percent on June 1, up from 9.3 percent on May 28. After this morning's Manufacturing ISM Report On Business from the Institute for Supply Management and the construction spending report from the U.S. Census Bureau, the nowcasts of second-quarter real personal consumption expenditures growth and second-quarter real gross private domestic investment growth increased from 8.6 percent and 20.7 percent, respectively, to 9.5 percent and 22.0 percent, respectively,” said the Atlanta Fed.

Goldman Sachs estimates 9.5 percent Q2 GDP growth while the New York Fed posts a much more conservative 4.5 percent spurt.

In fact, manufacturing activity is surging with the Institute for Supply Management reporting that The May Manufacturing PMI® registered 61.2 percent, an increase of 0.5 percentage point from the April reading of 60.7 percent. This figure indicates expansion in the overall economy for the 12th month in a row after contraction in April 2020.

President Biden’s budget, if enacted, would give a boost to GDP growth for the rest of this year because it targets working people that generate most economic activity, including essential workers that provide health care, police and fire protection, because they spend the largest percentage of their incomes.

And that is just a few of its elements, says VOX. “It also proposes universal pre-K, affordable childcare, and paid leave. It also puts the climate crisis front and center, with proposals dedicated to reducing US emissions, creating jobs in the clean energy sector, and funding climate research.”

Focusing on those folks that most need the support, this budget will give a huge boost to economic growth. The Federal Budget has supported the wrong segments of society for too long by cutting taxes and social services, when just the opposite is needed to end this coronavirus pandemic and be ready for whatever comes next that could damage economic growth—maybe our changing climate, or another pandemic?

Harlan Green © 2021

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