U.S. President Joe Biden proposed at the end of March last month one of the largest federally funded efforts to upgrade U.S. infrastructure and put the country on the path towards a greener future. Since the President has made the plans public, both republicans and democrats have slammed the plan, claiming it would only cover around 6% of traditional infrastructure in the U.S.
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Although the plan aims to assist with growing the U.S. economy, and upgrade existing infrastructure, experts in the building and infrastructure sector have shared widespread skepticism regarding the plan’s prospects for their businesses. In his initial statement to the public, Mr. Biden mentioned that the plan would help grow the U.S. economy and mitigate the problem of racial inequality in the building and construction industry. While the plan seems plausible on paper, a growing concern over its impact on sector-related businesses is becoming more widespread across the country.
What's Included In The Biden Plan?
The White House issued a fact sheet on relative executive actions. The $2 trillion plan is one of the largest in U.S. history, looking to upgrade existing infrastructure and help the U.S. economy move towards a greener and more carbon-neutral future. Mr. Biden has proposed $2.6 trillion in spending and tax subsidies throughout the next 8 years.
The spending breakdown would look as follow:
- Transportation: $621 million
- Manufacturing, R&D, job training: $590 million
- Clean energy: $400 million
- Home care services: $400 million
- Housing, schools & building: $328 million
- Broadband, electric & water: $321 million
These rough estimates present both positive and negative results in the long run. Republic representatives have in return claimed that Biden’s plan doesn’t focus enough on promoting economic growth for businesses in the building and infrastructure sector. If the plan is signed into law, there will be a strong focus on upgrading only certain infrastructures and include the promotion of clean energy deals.
Tax Increases And Clean Energy Tax Prospects
Under the Trump Administration, corporation tax was reduced to 21% from 35%. It is argued by some that Mr. Biden's plans to increase corporation tax to 28% could mean a potential delay in substantial growth for some businesses and corporations. An additional $400 billion from clean energy tax could be beneficial for some companies, but not necessarily for everyone.
Businesses in the building and construction industry would find it difficult to abide by these new tax increases slowing potential growth. Since its public release, Republicans have now started working on an infrastructure plan, estimating costs between $600 and $800 billion without any tax increases.
The increase of corporation tax could mean the evening of the playing field between richer American corporations, and minority groups and businesses. This could potentially help the average American catch up with the rapid pace some of these companies have been expanding over the last few years.
Long Term Plans Could Hinder Growth
Mr. Biden has mentioned that in the long run, the plan would reduce the budget deficit by introducing a higher corporation tax. The offset of large spending would run over 15 years, and although the plan is aimed towards increasing job opportunities and upgrading infrastructure focus won’t necessarily be given to ongoing or “shovel-ready” projects. This could slow down growth in the building and construction industry, as the plan aims to focus on an array of industries and sectors.
As the plan lay claims towards long-term innovation and upgrading of roads, bridges, and other infrastructures - both republicans and some democrats have shared their hesitant support thereof. Opposition comes in after Mr. Biden announced that the size of the plan would put American capitalism on the road to recovery, while at the same time increasing corporate taxes. New tax increases could mean corporations in the building and infrastructure industry are left on a slow road towards recovery and benefit from the plan.
Paving The Road For A Greener America
The Biden plan has a positive look towards putting America on the road towards a greener future. Biden pushes for the use of cleaner energy sources such as wind and solar, while at the same time introducing a plan to upgrade the electric motor vehicle industry. Roughly $174 billion in the plan is set aside to boost the EV market, upgrade existing facilities, and allow a portion of the money to go towards job training. The shift would put Americans currently working in the fossil fuel industry in a tight position, but also include space for new and innovative job opportunities.
Mitigating Stagnation In Federal Investment
Government officials gave praise that the Biden plan would ignite the federal investment and research for infrastructure, building, and the construction industry. To date, this would be the largest share of government investment since the 1960s. An example of companies that could be affected positively by spending that relates to the outcomes of the Biden plan are Brookfield Renewable Partners (NYSE:BEP), First Solar. First Solar (NASDAQ:FSLR) and. Surely Biden’s prospects could have a positive or negative effect on various companies - it all depends how up to date they are on green energy incentives.
