The Biden administration revealed the American Jobs Plan via a $2.65 trillion infrastructure bill they would like to have written and passed sometime this Summer. This note summarizes first impressions of the plan and presents our views on sectors that will likely benefit from its tailwinds if passed.
▪ The plan is a fiscal policy proposal aimed to incentivize investments across seven main segments.
These include transportation ($621B), manufacturing ($300B), utilities ($256B), buildings ($286B), education ($137B), job creation and innovation ($280B), and home- and community-based care for disabled elderly ($400B). A more granular breakdown of the plan’s contents can be found here. Because it is currently just a plan, and not an actual bill, it is difficult to assess what will be in the final version of the bill.
▪ Although its components are individually popular, it has received generally muted support overall.
Just as many survey respondents indicated that they supported the plan as said that they did not have enough information. However, when breaking the plan into pieces each individual element received greater than 70% support—except electric vehicle (EV) tax rebates and incentives, which was still greater than 50%. In Congress, sentiment is split along party lines with Republicans making the case that this is a “Green New Deal”, or social program masked as an infrastructure bill.
▪ We expect that a trimmed-down bill that is fairly limited in scope and focused on infrastructure spending would have more bipartisanship support.
There are six democratic senators in typically republican or closely contested states in the 2020 election: Arizona (x2), Georgia (x2), Montana (x1), and West Virginia (x1). Depending on the final version of the bill, democratic senators serving in these traditionally republican states may be hard pressed to support the bill. Joe Manchin (D-WV) and Bob Casey (D-PA) have said they do not want to use reconciliation to pass a bill of this nature. And republican commentary on the bill emphasizing that buildings comprise only 7% of the plan suggests that the democrats will not receive any help from the other side of the aisle should the bill match the plan in its current form. If the final version of the bill remains largely consistent with the Biden American Jobs Plan, it will be difficult to pass given these circumstances.
▪ Tighter elective situations suggest that the most likely scenario is that only “infrastructure” will make it into the final bill.
A more expansive set of objectives could result in an embarrassing failure to pass the bill. Thus, in our view, the most likely portions to be included will directly affect transportation, utilities, buildings, and possibly manufacturing. Potential avenues to take advantage of this assessment would fall along three lines: raw materials to build out each portion considered, firms that would do the actual construction of each, and any consultants that may need to be involved throughout the process.