Joe Biden is proposing to spend $ 6 trillion next year on the largest federal spending since World War II, according to a New York Times report. And Biden will push Congress to increase federal spending to $ 8.2 trillion by 2031. It is noted that the budget deficit in the next fiscal year will be about 1.8 trillion.
The increase in budget expenditures dictated by the need to carry out a large-scale modernization of the country’s infrastructure.
The main focus is on upgrading the transport system – it is planned to spend 621 billion dollars on this. Part of the funds will go to the “American Employment Plan”, with the help of which Biden expects to create several million jobs in the United States – according to him, the implementation of this plan would be “the largest investment in jobs”.
The Bitcoin price jumped about 7% after the news, trading above $ 40,000, but there has been a correction since then. It is now trading just below that level, having increased by about 2% over the past 24 hours.
Stocks were also reported to rally slightly on the new. With the Dow Jones Industrial Average rallying 0.4%, the S&P 500 0.3% and the Nasdaq rallying 0.2%.
Biden’s $ 6 trillion budget will be spent on infrastructure, education and healthcare.
Taxation and spending will also rise to levels not seen in the post-war era.
Biden had previously proposed significant tax hikes for the wealthiest American companies and individuals to fund his massive spending program. However, in his own words, this will prevent the government from reducing the budget deficit until at least 2030. Consequently, the United States will face a colossal debt burden as it borrows money to finance Biden’s record proposal.
Bitcoin thrives on news of rising spending
Bitcoin and stocks tend to thrive on news that the US government will increase their spending. This is because, according to some analysts, large government spending leads to inflation. So, investors are likely to look for other places, such as scarce assets, to invest their money.
According to polls, a large number of Americans receiving incentive checks, which are part of Biden’s larger COVID-19 relief package, have previously stated that they are eager to spend them on Bitcoin.
GOP spokesman and chairman of the Expenditure and Revenue Committee Kevin Brady criticized Biden’s plan. According to the politician, the artificial infusion of huge funds will burden the American economy with “a dangerous level of national debt”. In addition, Republicans fear that this will lead to a sharp increase in taxes for the middle class.
According to the Republicans, “only 7% of the funds under Biden’s proposals will go to real infrastructure” – the rest of the trillions of dollars will be wasted.
Biden will increase the national debt
According to US Treasury Secretary Janet Yellen, the “Biden plan” will lead to an increase in US government debt, which is already reaching record levels. At the same time, according to her, with average inflation and low bond yields, the country “can afford it”.