Biden to unveil $2 trillion 'once-in-a-century' infrastructure plan

WASHINGTON - President Joe Biden will on Wednesday propose a $2 trillion infrastructure plan aimed at modernizing the United States' crumbling transport network, creating millions of jobs and enabling the country to "out-compete" China.

The first phase of Biden's "Build Back Better" program, which he will unveil in a speech in Pittsburgh, will detail massive investment spread over eight years.

It plans to inject $620 billion into transport, including upgrading 20,000 miles (32,000 kilometers) of roads and highways, repairing thousands of bridges and doubling federal funding for public transit.

The president, whom Donald Trump tried to caricature as "Sleepy Joe" and a man without strong ideas or motivation, intends to make the bold infrastructure plan one of his flagship policies.

"He views his role as laying out... a broad vision, a bold vision for how we can invest in America, American workers, our communities," White House spokeswoman Jen Psaki said.

The investment would be partly paid for by raising corporate tax from 21 percent to 28 percent.

"The President is proposing to fundamentally reform the corporate tax code so that it incentivizes job creation and investment... and ensures that large corporations are paying their fair share," a senior administration official said ahead of the speech.

The new legislative offensive comes soon after Congress passed a nearly $2 trillion Covid-19 economic stimulus plan.

And Biden's speech is set to open a bitter battle in Congress, where the Democrats hold only a narrow majority and will face strong opposition from the Republicans.

The coming months will test the negotiating skills of the Democratic president, a veteran of Washington politics and deal-making, to the limit, and the chances of his infrastructure plan passing into law remain uncertain.

URGENCY OF THE MOMENT

"It's an important initiative to start the process with the president being very clear that he's got a plan, and that he's open to hearing what others think," the administration official said.

"But what he is uncompromising about is the urgency of the moment and the need to really deliver for the American people and make good on building back better in this moment."

The plan also vows to "spark the electric vehicle revolution" by building a network of 500,000 EV chargers, replacing 50,000 diesel transit vehicles and electrifying 20 percent of the famous yellow school buses.

And it aims to make infrastructure more resilient to climate change.

With much of the country's creaking infrastructure dating back to the 1950s, the dream of new roads, bridges, railways and airports is shared by many Americans.

But building a political consensus to transform Biden's plan into reality is no easy task.

Both his predecessors Barack Obama and Trump had great ambitions and made heady promises over infrastructure investment, but struggled to make any progress.

The issue keeps coming back to the same question: how to pay for it?

Biden's new transportation secretary Pete Buttigieg, who ran against him in the Democratic primaries, will be on the front lines of the battle, trying to ensure that this time, the stars are all aligned.

"I think that there's a tremendous opportunity now to have bipartisan support for a big, bold vision on infrastructure," the youthful politician said.

"Americans don't need a lot of selling to know that we've got to do big things when it comes to our infrastructure."

Agence France-Presse

In Bernanke's final act, Fed cuts stimulus despite market turmoil

WASHINGTON - The Federal Reserve on Wednesday decided to trim its bond purchases by another $10 billion as it stuck to a plan to wind down its extraordinary economic stimulus despite recent turmoil in emerging markets.

The action was widely expected, although some investors had speculated that the U.S. central bank might put its plans on hold given the jitters overseas.

Fed Chairman Ben Bernanke, who hands the Fed's reins to Vice Chair Janet Yellen on Friday, managed to adjourn his last policy-setting meeting without any dissents from his colleagues. It was the first meeting without a dissent since June 2011 - a sign of how tumultuous Bernanke's tenure has been.

In addition to proceeding with plans to scale back its bond buying, the Fed made no changes to its other main policy plank: its pledge to keep interest rates low for some time to come.

The decision suggests that it would take a serious threat to the U.S. economy before the Fed backs down from a resolve to shelve the asset-purchase program later this year.

Indeed, it offered a somewhat rosier assessment of the U.S. economy's prospects than it did last month, saying "economic activity picked up in recent quarters." It also largely shook off surprisingly soft jobs growth in December. "Labor market indicators were mixed but on balance showed further improvement," it said.

"They really want to move to the sidelines here and get out of the (bond buying) business," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

All 17 top Wall Street economists polled by Reuters on Wednesday expect the Fed to wind the program down by year's end, and nearly all believe the Fed won't raise rates until at least the third quarter of 2015.

Major U.S. stock indexes closed down more than 1 percent, while yields on the benchmark 10-year Treasury note hit the lowest level since late October. The dollar rose against the euro but was little changed against a broad basket of currencies.

ENDING THE PURCHASES

Importantly, the Fed stuck to its promise to keep rates near zero until well after the U.S. unemployment rate, now at 6.7 percent, falls below 6.5 percent, especially if inflation remains below a 2 percent target. Some analysts had speculated it might alter this guidance, given how close the jobless rate now is to the rate-hike threshold.

In fact, the central bank's statement largely mirrored the one it issued after its Dec. 17-18 meeting, when it announced an initial $10 billion cut to its monthly bond purchases.

At the time, Bernanke told reporters the Fed would likely continue to taper the purchases in "measured" steps through the year until it was fully wound down, as long as the economy continued to heal. He did not speak to the media on Wednesday.

In its statement on Wednesday, the Fed said it would buy $65 billion in bonds per month starting in February, down from $75 billion now. It shaved its purchases of U.S. Treasuries and mortgage bonds equally.

"The Fed's action today represents a continuation of its resolute determination to end (bond purchases) during 2014," said Daniel Alpert, managing partner at Westwood Capital in New York. "The policy has hit its 'sell by' date."

FOCUSED ON HOME

In announcing its decision, the Fed made no reference to the sell-off in emerging markets that has depressed U.S. stocks in recent days.

Markets in countries with large current account deficits, such as Turkey and Argentina, have suffered steep losses in part because of the prospect of less U.S. monetary stimulus.

These currencies and stocks slumped again after the Fed's announcement, offsetting aggressive interest rate hikes by Turkey and South Africa.

Meanwhile, economic signals in the United States - from consumer spending to industrial production and trade - have suggested the U.S. recovery closed out last year on solid ground, reinforcing expectations the Fed would continue trimming the stimulus. The weak December jobs report has been viewed as an outlier.

The central bank launched its current round of bond purchases in September 2012, its third such effort since the darkest days of the financial crisis in late 2008.

The effort to bring the purchases to a halt will now fall to Yellen, who has strongly backed the unprecedented actions the Fed has taken to boost growth and get more Americans back to work. She will chair her first policy meeting on March 18-19.

Bernanke, a professor and leading scholar of the Great Depression before joining the Fed, took the central bank far into uncharted territory during his eight years on the job, building a $4 trillion balance sheet and keeping interest rates near zero for more than five years to pull the economy from its worst downturn in decades.

source: www.abs-cbnnews.com