(FOX BUSINESS) — Democratic lawmakers are poised to plow ahead with passing President Biden’s $1.9 trillion coronavirus relief package, a measure that will provide an immediate burst to the U.S. economy but that could drag on growth in years to come.
That’s according to a new analysis published Wednesday by a nonpartisan group at the University of Pennsylvania’s Wharton School, which found that Biden’s proposal could increase the nation’s GDP by 0.6% in 2021. But the additional public debt resulting from his measure would decrease GDP, the broadest measure of goods and services produced in a nation, by 0.2% in 2022 and 0.3% in 2040.
“The Biden relief plan leads to an increase in output in 2021 as the plan’s expenditures stimulate the economy, but GDP declines in subsequent years as the additional public debt crowds-out investment in productive capital,” the report said. “The increase in output 2021 is due to the immediate stimulative effect of the economic recovery plan.”
