It has been a while since we last talked about infrastructure, but it is back in the spotlight in a big way. The Biden administration has proposed a massive $4 trillion investment into infrastructure, covering everything from rural broadband to elderly caregiving. Called the American Jobs Plan, by any measure, this is a once-in-a-generation proposal. Some are even comparing it to FDR’s New Deal. Whichever way you look at it, this one is a big deal.
The Details
Called the American Jobs Plan, the full $2 trillion is broken out in several different ways. The entire $2 trillion is not spent on infrastructure alone. Here are just a few examples of how this money will be spent:
- $115 billion: Bridge and highway repairs
- $174 billion: Electric charging infrastructure
- $20 billion: Cyclist and pedestrian road safety
- $17 billion: Inland waterways, coastal ports, land ports of entry, and ferries
The Biden administration is also proposing big chunks of money go to elderly care and buttress state and local economies. It is for this reason that Republican opposition has come out strong against the proposal. According to opposition lawmakers, infrastructure should only be roads and bridges and nothing else.
Certainly, there are arguments on all sides of this, with lawmakers jockeying do add their say. But with the Democrats likely to move forward without Republican involvement, expect to see a lot of partisan arguing over whether the package is too big, or even too small according to some in the progressive wing of the Democratic Party.
But what is most important to the trucking and transportations sectors? Roads and bridges. So, what exactly is in the plan that will address what is most important to those in our industries? Let’s take a closer look.
Highways, Roads, and Electric Infrastructure
The Biden administration has proposed $115 billion to modernize over 20,000 miles of highways and roads, 10,000 bridges, and full replacement of the nation’s 10 most “economically significant” bridges. Another $20 billion from the bill would go towards improving road safety and reducing crashes and fatalities of cyclists and pedestrians.
Also, expect to see money go towards reducing delays and bottlenecks at ports and airports, and big improvements to waterways and land ports of entry. These are crucial aspects of infrastructure that govern our nation’s freight needs. It is estimated that this work alone will put thousands of people back to work while also improving upon our nation’s infrastructure. Many consider this a definite win-win.
On top of the money for roads, highways, and bridges, the Biden administration is also proposing another $174 billion to invest in electric vehicle infrastructure. The program would establish grant and incentive programs for state and local governments. It would also set up a system to work with the private sector to build a national network of 500,000 charging stations by 2030.
Even better, trucking advocacy groups, including NATSO, which represents the truck stop industry, has come out in support of the plan, and has long advocated for investment into electric charging infrastructure. Of course, truck stops are a natural solution for addressing electric charging needs of fleets all over the country.
According to NATSO President and CEO Lisa Mullings, fuel retailers are uniquely placed to own and operate EV charging stations. She also stated that consumers should have multiple charging options competing for their business when it comes to price, speed, quality, and more. Still, there will need to be work done to upgrade the national grid should the U.S. move to create a national electrification infrastructure.
Paying for the Plan
The big question, and one of the main sticking points, is how all this will be paid for. As we know, Republicans are averse to tax increases, but the Democrats feel that a tax increase is really the only viable way to pay for it. Essentially, their plan is to increase the corporate tax rate to 28% while also reducing tax loopholes that corporations and wealthy individuals use to avoid paying taxes.
There has been speculation in the past as to how the Highway Trust Fund and infrastructure investments should be paid for. With the country moving toward an electric vehicle future, raising the gas tax simply might not be an effective way to raise the revenue. And with the Biden administration not being a fan of user fees or a rise in the fuel tax, they instead needed to find a way to pay for it without such methods.
Of course, any time you propose to raise taxes, expect a political fight. Industry advocates and Republicans on all sides have denounced the tax increases, saying that it would amount to the highest corporate tax rate in the industrialized world. It is important to point out that the tax rate proposed is still lower than the rate corporations paid before the Trump administration tax cuts of 2017.
The American Trucking Associations (ATA) released a statement saying they did not believe the proposal was “politically tenable” and not a long-term solution for funding the Highway Trust Fund. Still, they also said it was important, so it is likely they are trying to take a measured approach, happy that we might see improvements to infrastructure, even if they disagree with the methodology of the approach.
Of course, this is only the beginning. The bill still needs to get through both chambers of Congress, where it is highly likely that lawmakers will add their own amendments to it. And with Republicans stating they do not support it; Democrats may end up using arcane Senate rules to get it passed. The problem, Republicans say, is that the bill pretends to be infrastructure but is not.
What’s in It?
Some prominent Republicans have come out stating the plan is in fact a different version of the Green New Deal masquerading as an infrastructure bill. So, the big question is, what is actually in the plan?
Here’s the total breakdown of where the spending will go:
- 28% – Clean Water and Affordable Housing
- 27% – Transportation Infrastructure
- 25% – Research and Development
- 17% – Expanding Care for the Elderly and Disabled
- 13% – Investments in U.S. Manufacturing
Certainly, an argument can be made that expanding care for the elderly and investments in manufacturing, research and development are not infrastructure. If that were the litmus test, then around half of the plan would focus solely on infrastructure. But it could be why the Biden administration has called it the American Jobs Plan and not the American Infrastructure Plan.
Specifically, the plan, through Medicaid, assigns $400 billion for care for the elderly and those with disabilities. The funding would pay for the care of those individuals by visiting staff and would help facilitate the process of moving them out of long-term care homes and back into their own homes. The plan is to extend access to quality, affordable homes or community-based care.
The percentage of funds going to research and development and manufacturing would be specifically focused on semiconductors and green technologies. Certainly, there is much in this bill that Republicans would naturally oppose.
What Lawmakers Are Saying
Senate Minority Leader Mitch McConnell (R-Ky.) claim the plan’s proposals for replacing lead water pipes nationwide and refurbishing affordable housing units to become more climate-friendly do not constitute “infrastructure.” They claim the plan’s proposal to expand reliable internet isn’t applicable, either even though they’ve included similar provisions in past infrastructure pushes of their own.
Meanwhile, even some Democratic Senators may request some changes in the plan. Senator Joe Manchin of West Virginia, certainly the most conservative member of the Democratic caucus, recently told West Virginia radio host Hoppy Kercheval that Biden’s plan to pay for infrastructure by raising the corporate tax rate to 28 percent is a non-starter and that “this whole thing here has to change.”
He did go on to say that he would support a hike to 25%, saying that he never thought it should have been dropped below 25%, but still, shaving those three percentage points off leaves some serious funding gaps that must be patched up somewhere. And since it is highly unlikely that the shortfall can be accounted for by closing loopholes, there will likely need to be some major changes to the plan before it makes its way to the President’s desk to be signed.
With so much at stake, and so many interested parties adding their input the destiny of the American Jobs Plan is very much up in the air. Expect twists and turns as this massive plan makes its way through Congress. Because whether it passes or fails will have a big impact on trucking and transportation firms.