What President Biden’s $2T+ American Jobs Plan Could Mean For U.S. Infrastructure

The long-awaited $2T U.S. infrastructure plan has arrived. On March 31, 2021, the Biden Administration announced the American Jobs Plan and the complementary Made in America Tax Plan. They outlined which areas could receive investment, the amount of investment required, and different ways it could get funded. At a high level, it includes investment in…1

Physical Infrastructure

  • Transportation Infrastructure ($621B)
  • Buildings, Schools, and Hospitals ($250B+)
  • Infrastructure Resilience ($50B)

Energy, Water, and Digital Infrastructure

  • CleanTech, clean energy, and related infrastructure ($300B+)
  • Water utilities ($111B)
  • Digital infrastructure ($100B)

Much of the plan is in line with the expectations set in advance of the 2020 presidential election, though there are some differences (see How a Biden Presidency & COVID-19 Could Impact Infrastructure Development). In addition to the above, it includes investment in care for older and disabled individuals ($400B), manufacturing and small businesses ($300B), innovation and research ($180B), and workforce development ($100B).

In the next section, we will take a look at each infrastructure-related investment area. Following that, we will explore how the plan could get funded and what legislation could actually pass through congress.

Smile, Politician, Man, Adult, Male, Joe Biden, Cut Out


Image Source: Pixabay

INVESTING IN PHYSICAL INFRASTRUCTURE

Transportation: The American Jobs Plan addresses transportation infrastructure through investment in roads and bridges; public transit; electric vehicles (EV); passenger and freight rail services; and ports, waterways, and airports. In particular, the plan would:

  • Build and repair 20,000 miles of highway, roads, and streets, as well as fix 10,000 bridges in disrepair ($115B)
  • Establish and grow the U.S. EV market by incentivizing EV purchases, building a network of charging stations, reshoring supply chains for EVs and batteries, replacing or electrifying transit vehicles, school buses and the federal fleet ($174B)
  • Addressing repair backlogs for buses, rail cars, stations, and thousands of miles of tracks and other related infrastructure, as well as expanding public transits reach to meet demand ($85B)
  • Bolster passenger and freight rail services by addressing Amtrak project backlogs, connecting new destinations, and enhancing services in high traffic areas ($80B)
  • Upgrade commerce-facilitating infrastructure by improving ports and waterways, and modernizing airports ($42B)
  • Expand general transportation infrastructure in areas without affordable transportation options and where past investment created economic boundaries ($20B)

Buildings, Schools, and Hospitals: Other efforts to revitalize physical infrastructure encompass investment in commercial buildings, homes, schools, and hospitals. In particular, the plan would…

  • Build, retrofit, and/or rehabilitate over 2M energy efficient and electrified housing units, low and middle-income homes, and commercial buildings ($213B)
  • Improve education infrastructure by modernizing public schools, community colleges, and childcare centers with climate friendly and innovative facilities ($130B+)
  • Upgrade Veterans Affairs hospitals and federal buildings by building state of the art, climate-friendly facilities (~$30B)

Infrastructure Resilience: President Biden’s plan highlights the importance of ensuring that existing and new infrastructure is resilient to climate risk, natural deterioration, and obsolescence. Investment areas in this vein include protection from wildfires, coastal resilience, and research and development in durable advanced materials. While the entire plan inherently seeks to build resilient and climate-aware infrastructure, it also carves out $50B for these efforts.

Our Take

Inadequate transportation infrastructure results in significant economic losses that can be avoided with investment. Every year, traffic congestion costs our economy over $160B, motorists spend over $1,000 on lost fuel, and traffic accidents result in over 35,000 deaths (4x that of Europe per capita).By investing in physical infrastructure like roads, bridges, ports, and airports, the U.S. can limit economic loss by mitigating inefficiencies. Further, enhancements to transit and expanded transportation options and reach can improve overall productivity by facilitating commerce and improving economic participation.

The same can be said for investing in commercial buildings, homes, and hospitals. For one, widespread affordable housing can expand employment opportunities, while keeping consumption dollars (disposable income) in the hands of workers. The modernized nature of the structures the plan seeks to build can provide further economic benefit by improving the health of those who occupy them.

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Disclosure: The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate ...

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