Biden Relies on his Formula to Offset Stimulus with Fiscal Increases

The president-elect of the United States, Joe Biden, pledged during the weekend in his first speech after confirming his electoral victory last Saturday to restore the backbone of the country. He indicated the middle and working class. In the absence of a full majority in the Senate, which would mean control of 60 seats, the Democrats will have to fine-tune to appease the more progressive wing of his party and the Republican caucus.

The pillar of his economic plan advocates increasing corporate tax from the current 21% to 28%. He also seeks to double the rate on income earned by foreign affiliates of US companies from 10.5% to 21%. And raise capital gains tax from the current 23.8% to 43.4% for those individuals and families that register more than a million dollars.

Besides, Biden seeks to raise Social Security contributions by 12.4 points for wage income above $400,000 per year. Its fiscal goal is to raise as much as 2.7 trillion over the next decade. Which according to the Tax Foundation, a Washington-based think tank, will cut growth by 1.6 points and destroy 500,000 jobs.

With public leverage of 135% of GDP, after the outgoing president has added $6.5 trillion to the debt. Now, Biden is testing the possibility of expanding it by another $8 trillion. It’s more than any other president during his first four years in office. Thus, the Democrat’s program wants to spend 1.4 billion dollars on developing the health system promoted by Barack Obama, better known as Obamacare.

Biden’s climate plan will hit oil and gas companies

He also advocates accelerating the transition to an emissions-free economy through a Green New Deal. It would cost at least $2 trillion. While hoping to shore up the recovery with a stimulus that would exceed $3 trillion.

However, suppose the Republicans maintain control of the Upper House, something that will not be known until next January 5, when the results of the second round in Georgia are revealed and where two decisive seats are at stake. In that case, their tax plan will remain inactive.

Biden will dissipate strained trade relations with major allies beset by the frequent use or threat of tariffs. Along with restrictions on foreign workers and direct criticism of homeland companies.

Regardless of what happens in the Senate, it would be feasible to see a new stimulus package of up to a trillion dollars by the end of the year.

At the regulatory level, Biden’s climate plan, which seeks to neutralize carbon emissions across the country by 2050, will hit oil and gas companies.