Amid the pandemic, the US government has been spending heavily to stimulate economic recovery. Recently, after a tug-of-war between the two parties, the $1.2 trillion 'big infrastructure' bill has finally made new progress. But this is only the first step; whether the US government can ultimately raise the funds smoothly to carry out the plan, and whether it can boost the US economy as desired, still involves many uncertainties.

On the evening of July 28 local time, the US Senate passed by a vote of 67 to 32, reaching agreement again on the 'big infrastructure' bill proposed by President Biden. Among them, 17 Republicans and 50 Democrats voted in favor.

Overall, the bill plans to invest a total of $1.2 trillion over eight years, of which $559 billion is new spending, and an estimated $579 billion will be used for investment in new projects in roads, electric utilities, and internet broadband.

Although the procedural vote was passed, the details of the bill have not yet been finalized. According to The Washington Post, the current compromise includes $110 billion for road and bridge construction, $39 billion for public transportation, and $65 billion for building broadband internet in rural areas.

In the coming days, there are still several steps to go from the bill passed by vote to final law. The bill needs to be approved in a final vote by all members of the Senate, and then passed by the Democratic-led House of Representatives, before Biden can finally promulgate it as law. Senate Democrats hope to pass the infrastructure bill this month or early next month.

Regardless, reaching an initial agreement is not easy for the two US parties. After all, this plan was proposed at the beginning of Biden's term. Since then, the two sides have held long discussions over the scale and funding sources.

Until June 25, the Biden administration said that in order to reach an agreement, Democrats made concessions on taxes, such as not raising taxes on citizens with annual incomes below $400,000, not supporting an increase in the gasoline tax, and not increasing fees for electric vehicle users.

Even so, the differences between the two parties were still significant at the time, with the focus of debate on how to pay for the new spending in the infrastructure bill. The initial plan proposed more than ten financing schemes, including assisting the Internal Revenue Service in strengthening enforcement and investigating corporate tax evasion. But Republicans opposed the plan to assist the IRS in strengthening enforcement, refused to give the IRS greater power, and were unwilling for the agency to receive more funding. Subsequently, lawmakers from both parties confirmed that, due to strong Republican opposition, the plan to support the IRS had been removed from the infrastructure bill. After that, the two parties need to continue negotiations on how to raise funds for the infrastructure bill.

This disagreement also led to the subsequent failure to start debate. On July 23 Beijing time, in the US Senate vote on whether the bill could start debate, there were 49 votes in favor and 51 against, failing to reach the 60 votes needed to start debate.

After twists and turns, the legislative process of the infrastructure bill has finally moved forward an important step. Although this time only a procedural vote was passed, and there are still many obstacles before final passage and legislation, the result of such a vote is of great significance. It marks a major breakthrough by the US Congress in legislation on large-scale infrastructure investment.

As for how to raise funds for the new bill, the two parties have also gradually reached agreement to raise taxes on the wealthy and companies to obtain funds. At the same time, funding sources also include unused COVID-19 aid funds, unemployment insurance funds returned by states, and proceeds from fuel sales and auctions. In addition, on July 29, according to CoinDesk, a news website specializing in digital currencies, the infrastructure bill will also raise $28 billion from cryptocurrency investors.

Yan Jiantao, chief strategic executive officer of Longzhong Information, told Beijing Business Today that by selling fuel, especially exporting fuel, the United States can indeed raise part of the infrastructure funds. He said the United States has always been a major exporter of oil and natural gas, and its exported light crude oil is of good quality and highly competitive in the international market, which can bring considerable income to the United States. At the same time, if the United States appropriately raises domestic oil prices, it can also increase government revenue.

However, Yan Jiantao also stressed that the US government should pay attention to the extent of raising oil prices. As a 'country on wheels,' Americans are relatively sensitive to gasoline prices. Yan Jiantao believes that $3.5 per gallon is the warning line for US gasoline prices; if this price is exceeded, the American public is likely to feel dissatisfied. Beijing Business Today checked US gasoline prices and found that the latest data show the figure has reached $3.51 per gallon. This means the US government needs to take measures to control oil prices.

At present, the 'big infrastructure' bill has become the top priority of the White House. The Biden administration expects to inject a total of $4 trillion in investment over the next ten years to reshape the US economy. However, to what extent this infrastructure bill can boost the US economy remains unknown.

According to data from researchers at the Wharton School of the University of Pennsylvania, the $579 billion in infrastructure spending for new projects will increase US domestic output by 0.1% and reduce US debt by 0.9% by 2050. It can thus be seen that the impact of this infrastructure bill on the US economy is likely to be less than expected.