MM(mistermib)
Forumer storico
....e questo pensa con sti due spiccioli di raddrizzare il tutto, ma soprattutto di farsi rieleggere!!!!!!!ridicoli!!!
According to the press, Obama will propose a threefold package to stimulate the US economy:
1/ USD50bn spending in infrastructure over a 6yr plan (financed by eliminating tax deduction on oil&gas companies) 2/ USD30bn incentives to business investment for 2010-2011 3/ A permanent extension of the tax credit on R&D (USD100bn over 10yrs)
Our comment
1/ The size of the package is small. Even if 25% of the spending in infrastructure is spent in 2011, the overall amount for 2011 is c. USD50bn, i.e. 0.3% of GDP. This would not change materially our GDP forecasts if voted.
2/ The content of the package is not that bad overall. Infrastructure spending is needed as there is a chronical deficit in that matter in the US. In addition, it will give jobs in a sector that has a very high level of unemployment. Further, the tax credit on R&D supports innovation and therefore growth in the long term. However, tax credit for business investment is not very efficient. Bills to support the job market and the housing market may have a better option.
3/ The chances of the package to pass the Congress as is are also small. Republicans will oppose spending on infrastructures that they find inefficient. The tax credit side has greater chance to pass in our opinion. Republicans could propose a much bigger tax credit plan before the elections.
Conclusion
Obama's proposal is not a game changer from a macro standpoint. Fiscal policy can still help and we welcome the fact that proposed measures are focused on long term benefits for the economy but the US have not the room for another big stimulus.
What next? We will watch carefully talks in Congress. A compromise based on tax cuts/credits seem possible in our opinion.
According to the press, Obama will propose a threefold package to stimulate the US economy:
1/ USD50bn spending in infrastructure over a 6yr plan (financed by eliminating tax deduction on oil&gas companies) 2/ USD30bn incentives to business investment for 2010-2011 3/ A permanent extension of the tax credit on R&D (USD100bn over 10yrs)
Our comment
1/ The size of the package is small. Even if 25% of the spending in infrastructure is spent in 2011, the overall amount for 2011 is c. USD50bn, i.e. 0.3% of GDP. This would not change materially our GDP forecasts if voted.
2/ The content of the package is not that bad overall. Infrastructure spending is needed as there is a chronical deficit in that matter in the US. In addition, it will give jobs in a sector that has a very high level of unemployment. Further, the tax credit on R&D supports innovation and therefore growth in the long term. However, tax credit for business investment is not very efficient. Bills to support the job market and the housing market may have a better option.
3/ The chances of the package to pass the Congress as is are also small. Republicans will oppose spending on infrastructures that they find inefficient. The tax credit side has greater chance to pass in our opinion. Republicans could propose a much bigger tax credit plan before the elections.
Conclusion
Obama's proposal is not a game changer from a macro standpoint. Fiscal policy can still help and we welcome the fact that proposed measures are focused on long term benefits for the economy but the US have not the room for another big stimulus.
What next? We will watch carefully talks in Congress. A compromise based on tax cuts/credits seem possible in our opinion.
