President Biden outlined an ambitious plan to invest in America’s infrastructure this week. Axios CNN In this phase one of a potentially much larger spending proposal, Biden will propose to Congress that the US spend around $2 trillion over the next 8 years to make massive investments in traditional transportation infrastructure, broadband expansion, updates to the electricity grid and water systems, home care for the elderly and disabled, housing infrastructure, and investments targeted to US manufacturing. The administration frames the proposal as creating jobs, making America more competitive with China, and tackling climate change. CNBC The specifics of the plan will both emerge and evolve as Congress debates the proposal this spring.
To pay for this phase one infrastructure plan, President Biden proposes increasing the corporate tax rate from 21% to 28% for 15 years. Washington Post New York Times Corporate stakeholders (i.e., shareholders, employees, and customers) will therefore bear the cost of phase one.
Proposing vs Getting: President Biden recently quoted Bismarck, who observed that “politics is the art of the possible”. New York Times While the spending proposals themselves may be largely popular with the general public, which also supports higher corporate taxes, Senate Republicans will oppose higher taxes. Some moderate Democrats will have reservations. There is also a Democratic faction that wants to repeal the current $10,000 limit on deducting state and local taxes, which will complicate the negotiations.
Escaping 2% Growth? The US has been stuck in an underlying low 2% annual economic growth rate for decades, some fluctuations aside. One way to reach “escape velocity” and get to higher growth rates is to invest in our infrastructure, jump starting investment with targeted fiscal spending that will have a long term productivity impact. This may well be one of President Biden’s ultimate objectives. Wall Street Journal Axios But we need to better understand the costs. Will US corporations continue to be competitive globally? How much of the added tax cost will be passed through to consumers? Will there be downward pressure on the wages of corporate employees? Are these costs reasonable relative to the potential benefits of the phase one plan?
High-Octane Earnings: Dr. Edward Yardeni is one of our go-to experts for data on corporate earnings. He is bullish on earnings and is raising both his 2021 and 2022 forecasts. Dr. Ed's Blog
Ship Happens: The news about the ship getting stuck and then ultimately freed in the Suez Canal has been one of the more interesting stories. It blocked approximately 10% of global trade. The diverse cargo included livestock, lumber, oil, automobiles, exercise equipment, and instant coffee. It is another reminder that so much global trade depends on giant cargo ships and their ability to move unimpeded. Imagine what the person responsible for grounding the ship might have said when asked about how their day went. NPR
Covid-19 Resurging: Many of us have Covid-19 news fatigue, but we still need to be cognizant that the case count is increasing again in many states/cities. It continues to present a serious health and economic threat, even as the vaccination rate grows. As of March 29th, the case count is up about 15 percent from two weeks ago although still far below the levels seen in December and January. If you want to track a specific area, the Times’ Coronavirus Tracker has a feature that emails you with a daily update on specific states and metropolitan areas. New York Times
Excellent Vaccine News! Pfizer announced this week that its trial data is showing that its vaccine is 100% effective for children between 12 and 15. Axios We also noted another story about the profound future potential of the mRNA technology that made some of the Covid-19 vaccines possible. The Atlantic
Will Governments Outlaw Bitcoin? Ray Dalio, the noted hedge fund investor, believes that governments may eventually outlaw bitcoin. I get that because it is such a threat to the power of central banks and national governments. CNBC This is one more reason why bitcoin and other cybercurrencies are so speculative.
A Quote to Consider: “We take care of the future best by taking care of the present now.” Jon Kabat-Zinn
Worthy Short Takes:
- mRNA Technology: This is the underlying technology used to produce the major Covid-19 vaccines. It is a proverbial very big deal because of its potential uses. The Atlantic
- The Collateral Benefits of Masking: Flu and colds are way down, presumably due to masking and social distancing. Should we get used to masks? NPR
- Stanley Tucci’s Recipes: A recent Friday Buzz brought the Stanley Tucci’s Italy series to your attention. This past week alone three discerning friends recommended the series to me. See these popular six recipes from the series. CNN And an excellent New Yorker piece. New Yorker
- Helpful Foods to Support Those with Autism: Please consult with your doctor before encouraging anyone to begin consuming massive amounts of cruciferous vegetables as a medical treatment strategy. But food as powerful medicine is often ignored, as big pharma doesn’t have much incentive to test readily and cheaply available fruits and vegetables. NutritionFacts.org
- 32 Great Character Actors: These actors are all still working. How many do you recognize? I didn’t do that well. Vulture
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As always, thank you for reading. Stay safe and be well. We look forward to hearing from you and connecting.