Negotiations over a bipartisan compromise on infrastructure spending continued this week, but the Republicans and Democrats are still so far apart in their offers that it is only a matter of time before these talks collapse. The Democrats next best option is to try passing a combined infrastructure and social welfare spending bill via reconciliation when the next fiscal year begins this October. Even if the centrist Democratic Senators are willing to support such a bill, which remains unclear, the spending would be largely paid for via higher taxes on corporates, capital gains and high-income earners. As the impact would be close to revenue neutral, we won’t be rushing to revise our real GDP growth or inflation forecasts.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services