The numbers are dizzying: after a $3trn package to boost the US economy, the Biden administration also unveiled a $2trn, eight-year infrastructure plan, and envisages $1trn of supplemental aid for families.

It’s a real Keynesian gamble marking the return of the federal state to the economic game.

For Florent Delorme, this plan--which must now be negotiated with Congress--is much more than an infrastructure plan. It's officially called "The American Jobs Plan". 

“Conceived in the context of a strong strategic rivalry with China, it has an important industrial component and also has a significant social component,” Delorme says.

It is made up of four major expenditure items. The first, for an amount of $620bn, relates to transport. "It is certainly a question of renovating American infrastructure after years of underinvestment (roads, bridges, public transport), but also of developing the electric vehicle with, for example, a grid pattern [of] charging stations." 

The second part of this plan concerns the improvement of living spaces (water, broadband internet services, renewable energy, energy efficiency, etc.) for a total amount of $650bn. The third part of the budget at $580bn is earmarked for American industry (semiconductors for example, research, energy transition, etc.). The fourth main expenditure consists of a envelope of $400bn for the elderly and the most vulnerable (housing, hospitals, schools, nurseries, etc.).

Take back control against China

Its financing will be ensured by a corporate tax rate increase, expected to rise from 21% to 28%, while the minimum tax rate for international activities will change from 13% to 21%.

The first international consequence of this programme: the desire of the Biden administration to achieve the creation of a global minimum tax on companies.

Secondly, the plan aims in part to respond to Chinese ambitions. "The industrial part of the plan is there to try to regain the advantage in the face of Chinese dynamics." Delorme also notes the marked protectionism of the programme, stating, "the contracts will have to go to American companies with American workers."

But there is also a lack of ambition in terms of ecological transition, with the "Green New Deal" promised by Biden not yet in sight. Delorme speaks of "the absence of carbon tax creativity. [While] Europe is going to finance its recovery plan through the carbon tax, the United States is using a more traditional fiscal tool."

Another question raised by this long-term plan concerns increased public spending. "At this point, the markets are not worried about this rise, but will they not one day change their perspective on it?"

This is the question that may well be in the news in the markets once the covid crisis has passed.

This article was originally published in French on Paperjam and has been translated and edited for Delano.