July 30, 2021

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Biden Infrastructure Plan Aims to Boost Economy’s Productivity Over Time – The Wall Street Journal

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WASHINGTON—The Biden administration’s $1.9 trillion Covid-19 relief package enacted last month aimed to get the economy back on track fast. Now, officials are set on increasing the speed limit for the long term.

The roughly $2.3 trillion spending proposal unveiled Wednesday would make investments in infrastructure over the coming decade that officials say would enhance the economy’s productivity, such as through public transportation upgrades that make it easier for commuters to get to their jobs, or rural broadband expansion that improves workplace technology.

Economists say those types of changes could enable the economy to grow more rapidly over the long term and lift living standards without triggering worrisome inflation.

But critics, including business groups and many Republican lawmakers, say the administration’s plan to pay for the measures through tax increases will damp investment, undercutting the boost to growth. Some note the plan will add to federal budget deficits, at least temporarily. And some observers say parts of the package won’t do much to raise productivity and change the economy’s long-term growth trajectory.

“It depends on the investment,” Alan Auerbach, an economist at the University of California, Berkeley, said of the potential for raising long-term growth. “Anything that makes workers more productive and private businesses more productive would all seem to be helpful.”

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