If a multi-trillion dollar infrastructure bill is signed into law, should interest rates go substantially higher? The federal cost to borrow for 10 years, without adjusting for inflation, is up from .93% to 1.73% during 2021, as of March 29. The recently enacted $1.9 trillion American Rescue Plan has been a background story throughout.

It may be important to emphasize the difference between real, or inflation adjusted, and nominal interest rates. If accounting for changing prices or future buying power, rather than a 1.73% cost to borrow, the published rate is -.63%. The perspective here is that interest, energy prices and currency valuations are similar as key parameters of financial markets and the economy. Low borrowing costs should help. However, sudden and steep changes could be worrying. 

Meanwhile, with nominal interest rates going up, the stock market has had moderate volatility. The S&P 500 is still about 7.08% higher year to date. That, however, does not mean 21 to 22% is in store for through December, though it can not be ruled out. Of course some stocks are faring far better than others.

Current talk about infrastructure spending, not necessarily pandemic relief, could most easily be categorized as stimulus; though there are headlines describing the recent $1.9 trillion as a boost also. As vaccine data has continuously been positive, and persons are becoming better protected against the virus, it is reasonable to anticipate some sort of convalescence, rebound, or bounce back that is national, and perhaps global. A recovery may coincide with even higher deficit spending in the form of stimulus.

Political Terms

As a sidebar, attention to some political terms could be worthwhile. Technocrat or technocracy appear increasingly applicable as the most important companies, some worth trillions of dollars, are technological enterprises. Persons with aptitudes in computer or software engineering can be highly paid by an Amazon.com, while wages, benefits, working conditions; and issues of unionization; of its warehouse personnel and delivery drivers is frequently political fodder. 

Was it technocrats who used to say that a facemask was not advisable to slow the pandemic, that a mask is only recommended for medical personnel? Was it technocrats who then recommended N95 masks as the premium option? Technocrats were also probably saying that vaccines, that have been rushed through clinical trials, and there is a liability shield for biotech companies that produce them, were safe. 

Let’s hope they are right this time!

However, if technocrat is a standard term that is not disparaging, “Econocrat” may be less so. Are there bridges, tunnels, and other forms of infrastructure that genuinely are safety hazards or have other exigent reasons for repair? Probably. Do liberal economists persistently advocate infrastructure spending? Yes. If future infrastructure spending is to satisfy callings of economic experts, it might be “Econocratic” moreso than anything else.

Who exactly is it that supports spending $3, make that $4 trillion? Maybe not all the technocrats; though they typically have a leftward orientation and it may redirect attention dedicated to communications or antitrust issues away from big tech. In Tocqueville Between Two Worlds, Sheldon Wolin states that technocrats have ambivalent loyalties.

Still, stimulus is not a ballot issue, though infrastructure was a part of Joe Biden’s successful campaign platform.

Media has been full of commentary about the deficit and debt financed $1.9 trillion. Such matters can be partisan. There is support from Democrats, and throughout the left, but some dissenting voices air fears about inflation.

Maybe the national debt is not a concern. It has risen very, very sharply in recent years. So far, this year is on track to mark a higher deficit than last year, which was a record at over $3.1 trillion. 

However, current news says that a $4 trillion outlay would be funded mostly through tax increases. Unfortunately, carbon or emissions taxes, despite clear recommendation by experts, apparently are not under consideration. Per available information about requirements in the United States Senate, such a bill probably could not be passed unless through a process known as reconciliation because of requisite support of 10 Republicans to overcome a filibuster. Even so, there could be another $1 trillion in deficit spending if the included tax increases, including corporate and global minimum rates, make it work.