They sure weren't very respectful at the Alaska meeting.
Or with the U.S. diplomats in China, what with the anal swabs and all.
President Joe Biden’s proposed $2.3 trillion spending package unveiled March 31 should have come a day later, as an April Fool’s exercise.
Labeled an infrastructure package, it offers just $447 billion for transportation infrastructure over eight years. That’s less than a quarter of the most widely accepted estimates for the US infrastructure deficit.
On February 21, Biden told a group of US senators, “If we don’t get moving, [the Chinese] are going to eat our lunch. They’re investing billions of dollars dealing with a whole range of issues that relate to transportation, the environment and a whole range of other things. We just have to step up.”
Biden might as well instruct Secretary of State Blinken to ask the Chinese if they want fries with that.
Most of the $2.3 trillion will buy votes rather than infrastructure, including $400 billion for “elder and disability care,” $213 billion for “green and affordable homes,” $174 billion for electric vehicles, $137 billion for “school and childcare infrastructure,” $100 billion for “job training” and so forth.
It’s a smorgasbord for Democratic Party urban constituencies that leaves $180 billion for “R&D in tech of the future” and $300 billion in manufacturing subsidies as an afterthought.
Most incongruous of all is the accompanying corporate tax hike, to a 28% base rate from the present 21%. Corporations fund most of the R&D that turns into new products. That will suck $695 billion out of corporations, according to the Biden calculus, or three-and-a-half times as much as the $180 billion in additional proposed R&D spending.
And that $180 billion will go mainly to universities, with an emphasis on climate research and other fluff. That’s $180 billion over eight years, or an average of $22.5 billion a year in new money. China’s National People’s Congress last year mandated $560 billion per year of funding for new technologies.
The cost of hiring R&D staff in China is a third to half the comparable cost in the US, so China’s tech spend is closer to $1 trillion a year in terms of purchasing power parity.
Under the Carter and Reagan Administrations, federal R&D spending reached about 1.4% of GDP, or the equivalent of $300 billion a year in 2021 dollars. Today the US spends just 0.6% of GDP, or about $130 billion, on federal R&D.
To restore federal R&D to the level that prevailed when the United States created the digital economy, it would have to spend each year the $180 billion that Biden proposes to ladle out over eight years....
....MUCH MORE
As we've pointed out elsewhere, the author, David Goldman was one of those guys who couldn't keep a job:
- Global head of credit strategy at Credit Suisse
- Global Head of Fixed Income Research for Bank of America
- Global Head of Fixed Income Research at Cantor Fitzgerald
I think one of his requirements for moving on was a "Global Head" title.
Now he's Deputy Editor (Business) at AT.
