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Moody's - President Biden’s American Jobs Plan would boost US growth and reshape parts of the economy

·10 min read
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Research Announcement:

Moody's - President Biden’s American Jobs

Plan would boost US growth and reshape parts of the economy

New York, April 12, 2021 --

» Plan would be positive for US economic growth, employment and productivity
» Higher corporate taxes would have limited effect on economy and corporate credit quality

President Joe Biden recently unveiled the American Jobs Plan, a proposal that would direct about

$2.3 trillion over ten years toward physical and digital infrastructure, domestic manufacturing, new

technologies, workforce development and caregiving. In a new report, Moody’s Investors Service

examines how the direct spending and tax credits in the plan would benefit a wide range of issuers

including infrastructure assets, state and local governments, electric utilities and automakers.
“If enacted, the plan would be positive for US economic growth, employment and productivity.

Beyond supporting economic output and jobs, the proposal aims to restructure parts of the US

economy by investing in clean energy, new technologies and workforce development,” says Moody’s

Vice President Rebecca Karnovitz. “Through these channels, it also seeks to advance the Biden

administration's stated objectives of reducing carbon emissions economy-wide and redressing social

and racial inequities. However, the magnitude of the plan's economic, social and environmental

impact will ultimately depend on the details of any legislation that is passed.”
The proposed spending would likely start flowing through the economy in 2022 and would raise

aggregate demand and employment in both the short and long term. The short-term impact would

likely be magnified by the crowding in of business fixed investment. Moody’s expects the private

sector to seek to benefit from increased federal government spending and support to infrastructure,

broadband, manufacturing, housing and R&D. In the long term, a larger physical capital stock

resulting from infrastructure and manufacturing investment would likely increase the productive

capacity of the economy.
President Biden has proposed raising corporate taxes to pay for the spending package. While some

companies would face higher tax bills, the drag on the US economy likely would be limited. Moody’s

believes that aggregate fixed corporate investment trends depend more on the growth outlook than

on corporate tax rates. Furthermore, the credit impact of increased tax rates likely would not be

material for most rated nonfinancial companies.
Subscribers can access the report at:

http://www.moodys.com/researchdocumentcontentpage.aspx?

docid=PBC_1276226

NOTE TO JOURNALISTS ONLY: For more information, please call one of our global

press information hotlines: New York +1-212-553-0376 , London +44-20-7772-5456 , Tokyo

+813-5408-4110 , Hong Kong +852-3758-1350 , Sydney +61-2-9270-8141 , Mexico City

001-888-779-5833 , São Paulo 0800-891-2518 , or Buenos Aires 0800-666-3506 . You can also email

us at mediarelations@moodys.com or visit our web site at www.moodys.com.
This publication does not announce a credit rating action. For any credit ratings referenced in this

publication, please see the ratings tab on the issuer/entity page on

www.moodys.com

for the most

updated credit rating action information and rating history.

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Rebecca Karnovitz

VP-Senior Analyst/CSR

Credit Strategy & Standards

Moody's Investors Service, Inc.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Robard Williams

Senior Vice President/CSR

Credit Strategy & Standards

Moody's Investors Service, Inc.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Releasing Office:

Moody's Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653

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