The Day at a Glance | Aug 8 2022

The Top

*The US Senate approved a fiscal and energy related fiscal package with Democrat support, which will revive President Biden`s economic plan.

*China`s exports surprised to the upside during July; the country`s trade surplus reached a new all-time high.

*China extends military exercises on border with Taiwan in order to maintain pressure on the island.

*Subsidy proposal to purchase electric vehicles in the United States makes progress in the Senate, although with greater restrictions.

*Taiwan`s Minister of Finance discarded greater economic sanctions carried out by China given their economic interdependence, especially regarding the electronics sector.

*Petro retakes Presidency in Colombia, is committed to redistribute wealth.

*Germany`s Minister of Finance will propose a fiscal aid package for tax payers of up to 10 billion euros for 2023: Der Spiegel.

Economic environment

Biden`s economic agenda. After more than a year and a half of negotiations, Democrats in the Senate agreed to approve a fiscal package that backs President Biden`s economic package, Build Back Better. The plan has been considerably reduced from what the Biden administration had originally considered – it now only considers using 437 billion dollars in 10 years, which will mostly focus on spending and incentives to boost green energy and reduce green-house gas emissions in 40% by 2030. The law considers carrying out fiscal stimulus for solar energy and nuclear production, hydrogen production, subsidizing the purchase of electric vehicles (although with more restrictions than what was originally planned), some improvements regarding Medicare, and a decrease in prices among some medications. Additionally, the plan considers collecting 740 billion dollars through a 15% minimum tax on large companies, excluding private equity firms. None of the original tax proposals for high income individuals are included in the law, such as increasing the capital gains or the inheritance tax. However, the plan does consider reducing the public deficit in 300 billion dollars in 10 years. The law gives the Democrats something to show off ahead of November`s intermediate elections, although Biden`s original proposal has been considerably reduced.