Biden`s New Deal: mega infrastructure program, modernization of the US economy, upgrading US resilience and a transatlantic New Silkroad
US President Joe Biden has announced a massive investment program. Biden tries to convince the Americans for his billion dollar infrastructure program: It would create millions of jobs, modernize America and deeply shape the future of today’s generations. The Republicans have announced resistance. US President Joe Biden has touted his massive plan to modernize the country’s infrastructure as the largest labor program since World War II. The approximately two trillion dollars (1.7 trillion euros) package is a project that will determine a generation like the space program or the construction of the highways, said Biden on Wednesday in the State of Pennsylvania. The plan will create „millions of jobs“ and help the United States compete with China. Congress must decide the package, he demanded. „We have to do it,“ emphasized Biden. Financed through tax increases Biden’s plan includes the modernization of around 32,000 kilometers of roads, 10,000 bridges, several airports and investments in local public transport and electromobility. Part of the program is also the broadband expansion and the renovation of the water supply system, said Biden in the city of Pittsburgh about his proposal. The expenses are to be financed, among other things, by an increase in corporate tax. „The law offers a fair economy that gives everyone a chance to succeed in creating the strongest, resilient and innovative economy in the world, it’s not a plan to change small things,“ said Biden. The US is one of the most prosperous countries in the world, but the country’s “crumbling” infrastructure only ranks 13th after decades of inadequate investments, complained Biden. That is also a threat to national security. „Simply put, these are investments that we have to make – we can’t afford not to,“ said Biden.
The Democrat had already spoken out in favor of a large package to improve the infrastructure during the election campaign. For the adoption of such a package, however, he is likely to have to rely on the approval of around ten Republicans in the Senate, which is at least uncertain. The Senate Republican Minority Leader, Mitch McConnell, immediately rejected the plan. With subsidies for the auto industry, Biden wants to achieve the market leadership of American manufacturers in the field of electric cars. The government does not only want to set up charging stations across the country and give purchase incentives for American-made electric cars. She also wants to harness the purchasing power of federal agencies and corporations to stimulate American electric car production. The entire vehicle fleet is to be electrified. The production of critical industrial goods in the United States is to be promoted with approximately $ 100 billion. Biden wants to reserve $ 50 billion for the production of microchips alone.
An important strategic decision by Biden is to modernize the US economy and infrastructure. Also interesting is the 50 billion for the microchips. In view of the dependence on Taiwan Semiconductor Manifacturing Company (TSCM ) and other foreign chipmakers overdue.
“TSMC has long gone largely unnoticed because the semiconductors it manufactures are designed and sold in products by branded vendors such as Apple, AMD or Qualcomm. Yet the company controls more than half of the world market for made-to-order chips.
And it is getting more dominant with every new process technology node.
While it accounts for only 40 per cent to 65 per cent of revenues in the 28nm-65nm category, the nodes used for producing most car chips, it has almost 90 per cent of the market of the most advanced nodes currently in production.
“Yes, the industry is incredibly dependent on TSMC, especially as you get to the bleeding edge, and it is quite risky,” says Mr Peter Hanbury, a partner at Bain and Company in San Francisco.
“Twenty years ago, there were 20 foundries, and now the most cutting-edge stuff is sitting on a single campus in Taiwan.”
Since every new node of process technology requires more challenging development and bigger investment in new production capacity, other chipmakers have over the years started focusing on design and left production to dedicated foundries such as TSMC.”.( Kathrin Hille in: Financial Times)
Let’s see if the Republicans go along with it. Higher corporate taxes are a red rag for them. And then beyond the modernization of the US economy and infrastructure and upgrading of the US resilience, Biden also proposed a transatlantic Silk Road for Eurasia and Africa. However, while a US infrastructure program will be seen as America First policy even by Trump, a Western Silkroad might cause resistance by the America firsters. But on the other side as it would be a project to counter China´s BRI and China´s rise to a world power, the resistence might also vanish. Another question was how to finance, organize and coordinate a Western transatlantic Silkroad. Biden already had another 1,9 trillion dollar Corona program which increased US debts to a critical mass and a new height. Therefore he wants now to finance his infrastructure program by an increase in corporate taxes which the Republicans reject as lobby of big business, because of worries about the competitivness of US companies and because the idea comes from the Democrats.