A Big Infrastructure Bill Would Benefit The Construction Industry, But Its Passage Is Uncertain
President Joe Biden campaigned on reinventing the nation's infrastructure — as did his predecessor. Now such grand plans face the reality of congressional deliberation and, perhaps, resistance.
Previous bold infrastructure plans have tended to come to naught. But should all or part of the new president's plan be enacted, major construction firms stand to benefit, especially those with experience in sustainability.
“I think we go big or go home,” Rep. Salud Carbajal, a Democrat from California who is vice chair of the House Transportation and Infrastructure Committee, told Politico. “This is a chance to put forward a real comprehensive infrastructure bill that will invest in our infrastructure and create jobs.”
Altogether, the president has proposed spending about $2 trillion over the next four years on a plan that facilitates $50B worth of traditional infrastructure building on roads, tunnels and bridges in the first year while also prioritizing sustainable initiatives, such as supporting the further development of battery storage and electric vehicles.
Of particular concern to the construction industry, the plan proposes to upgrade 4 million buildings and weatherize 2 million residential properties over the next four years, as well as build 1.5 million energy-efficient single-family homes and multifamily units. The plan also calls for encouraging building retrofits and efficient appliance production by providing direct cash rebates and low-cost financing.
"Where will infrastructure spending money go? Construction firms could benefit," Kristoffer Inton, director of basic materials equity research for Morningstar, told CNN.
Examples of construction companies that might benefit from such a vast expansion in spending include Fluor Corp., an engineering and construction company; AECOM, whose projects include bridges, ports and buildings; and KBR, which specializes in aerospace, defense and energy projects, 24/7 Wall St. reports.
Transportation secretary nominee Pete Buttigieg, in testimony before the Senate Commerce, Science and Transportation Committee on Thursday, said he supports the $2 trillion infrastructure plan.
“We also have a lot of work to do to improve the infrastructure in this country, a mission that will not only keep more people safe but will grow our economy as we look to the future,” Buttigieg said. “Now is the time."
Still, paying for infrastructure projects has long been an obstacle to such proposals. Road repairs and bridgework, for example, are typically funded through gasoline taxes, but in recent years, the revenue generated that way hasn't been enough to keep pace with necessary work.
“I think there’s a recognition that we don’t have adequate national resources going into roads and highways and that we need to look at any responsible revenue mechanism we can all agree on to do something about that,” Buttigieg said.
That would likely include raising the gasoline tax, which hasn't been changed since 1993 and which isn't indexed to inflation. Buttigieg didn't confirm or deny that the administration would seek higher gas taxes.
Although the senators at the hearing seemed generally supportive of Buttigieg's nomination, there was skepticism about whether such a massive plan would ever be approved.
“The other thing that enjoys bipartisan popularity around here is not paying for it," said Sen. John Thune, a Republican from South Dakota, referring to the popularity of infrastructure plans in Congress.