We already know that the White House and Congressional Democrats are in early talks about an overarching infrastructure bill that will be even bigger than the $1.9 trillion coronavirus spending package, but how big?
According to Bloomberg, the Biden administration and congressional leaders are considering proposals that could be as large as $4 trillion over ten years.
Now that his $1.9 trillion Covid rescue plan has cleared Congress, Biden is gearing up to roll out a “Build Back Better” plan that envisions spending at least $4 trillion over 10 years on infrastructure and strategic industries such as semiconductors, renewable energy, and electric vehicles. He promises that government action will not just generate millions of jobs and help the U.S. compete with China but also reduce inequality and help battle climate change. [...]
The long-term stakes are enormous for the U.S., says Jonathan Gruber, an MIT economist who with colleague Simon Johnson laid out a prescription last year for a government-led push to reinvigorate the economy in their book Jump-Starting America. In too many vital industries “we’re just not at the top of the game anymore,” Gruber says, pointing to once proud areas of U.S. achievement such as robotics and synthetic biology. “At the end of the day if you are worried about competing with China, it is not tariffs that’s the answer, it’s out-inventing them.”
Before he was sworn into office, Biden and his advisers downplayed the importance of Trump's trade war with China and Biden himself said China will 'eat our lunch' if we don't start investing in our own economy the way they do.
The Biden administration has already taken steps to end Trump's trade war with Europe by suspending tariffs on British and European goods for the next four months while a permanent solution is negotiated, but they haven't touched Trump's tariffs on Chinese goods yet.
It seems reasonable to infer that passing the "Build Back Better" plan or something close to it will be the central policy that will finally enable the end of Trump's trade war with China. It's politically dicey for Biden to unilaterally end the trade war with China even if we have nothing to show for it up to this point aside from higher prices. He needs something he can point to to say he's tackling our problems or unions and some congressional Democrats will break from him on economic policy. No one can afford for that to happen heading into the midterm elections next year.
It's logical, smart thinking. I just hope he can pass it or we may be stuck with Trump's trade war for even longer.