Biden’s Historic Infrastructure Plan Not Just Roads and Bridges

Biden’s proposal defines infrastructure in the broadest of terms.

Among its targets for “hard” infrastructure investment are calls for the modernization of 20,000 miles of highways, replacing the nation’s 10 most economically significant bridges and repairing 10,000 more. It seeks to build new rail corridors and transit lines and to reduce bottlenecks at ports and airports. And it would, if passed, provide tax incentives for electric vehicles and create a network of 500,000 charging stations. It also aims to replace 100% of the lead pipes in the nation’s water systems.

On the “soft” infrastructure side, the plan could ensure that every American has access to affordable high-speed Internet service. It seeks to provide support for caregivers for children and the elderly. And it will expand non-defense R&D spending, among other initiatives.

To pay for it, the Biden administration proposes raising the corporate tax rate to 28 percent from the current 21 percent. It also would establish a global minimum tax of 21 percent for U.S. corporations and would eliminate deductions for corporations that offshore jobs and shift assets overseas.

U.S. Steel praised President Biden’s plan as did the United Steelworkers (USW) union. Both are based in Pittsburgh.

“We haven’t funded infrastructure properly and it has become a drag on the economy—one that continues to grow with every passing day,” said U.S. Steel President and CEO David Burritt. “President Biden has rightly recognized that investing in infrastructure is the no-regrets way to help both the U.S. economy and the environment. Congress and the administration should work together to take decisive action on infrastructure. The benefits to our society and economy will be both swift and long lasting.”

“It’s fitting that President Biden chose Pittsburgh to announce his ambitious, far-reaching jobs and infrastructure plan,” said United Steelworkers (USW) International President Tom Conway. “This city and so many like it across our nation are the homes of not only the industries that will fuel this initiative but also the union members who stand ready to do the work. A large-scale investment is certainly long overdue, but more importantly President Biden has made it clear that he, like our union, takes an expansive view of infrastructure. This is one that, in addition to repairing our crumbling roads, bridges, waterways and other transportation networks, also ensures that we have state-of-the-art schools, reliable communication systems, robust public health and much more.”

But whether such a large expenditure, funded in part by high taxes on the wealthy, can get bipartisan support in Congress remains an open question – especially given the trillions already spent on economic stimulus.

The American Iron and Steel Institute offered its qualified support for the new spending, noting that every billion dollars spent on infrastructure requires about 50,000 net tons of steel and has the potential to create 11 million jobs over the next decade. “AISI greatly appreciates President Biden’s commitment to building back better America’s roads, bridges, waterways, rail, electrical grid and other critical infrastructure—and doing it with American made steel,” said AISI President and CEO Kevin Dempsey.

AISI does not support the corporate tax hike. “AISI’s view is that the best way to fund infrastructure is through a dedicated user fee rather than through the corporate income tax, revenues from which go to the general treasury. AISI has long advocated for bolstering the user fees that are dedicated to funding the Highway Trust Fund and other infrastructure funding mechanisms. This is important to provide the needed certainty in terms of funding for states to implement long-term steel-intensive infrastructure projects. While this is not currently part of the president’s  proposal, we look forward to continuing to work with the administration and Congress to develop a bipartisan legislative package that supports long-term, sustainable funding and ensures that steel that is melted and poured in the U.S. is used to rebuild America’s roads, bridges, water systems and energy infrastructure.”

In expressing its support for the administration’s proposal, the Steel Manufacturers Association said funding should include an “all of the above strategy” that incorporates increased user fees, revenue from gas taxes and Public Private Partnerships (PPPs). “The American Jobs Plan will result in an historic capital investment in America to improve our competitiveness, create millions of jobs, rebuild our infrastructure, address climate change and prepare our economy for the crises and the threats we will face in the future,” said SMA President Philip Bell. “We support the administration’s emphasis on strong domestic procurement preferences that help ensure that the steel used in our nation’s infrastructure is made by Americans for Americans and is melted and poured here and not abroad.  This has a dual benefit.  First, it creates more steel demand. For every trillion dollars invested in infrastructure, over five million tons of carbon steel demand is created. Second, using American-made steel is better for our environment. The United States produces the cleanest steel in the world with the lowest CO₂ intensity of any major steel producing country.”

The Associated General Contractors of America greeted the president’s announcement with more mixed emotions.

AGC CEO Stephen Sandherr said the plan will create many new construction jobs. “Unfortunately, the president seeks to saddle these new investments with a host of labor and regulatory measures that will hurt workers and offset many of the economic benefits of these new infrastructure investments. The president’s proposal to finance the new investments primarily via an increase in the corporate tax rate will likely undermine many of its economic benefits,” he said.

And trade groups representing the American trucking and rail industries, while commending the president for his vision to modernize and revitalize the nation’s aging transportation networks, also criticized his plan to pay for them.

“We do not believe the administration’s funding proposal is politically tenable nor a reliable long-term solution to the shortfall facing the Highway Trust Fund,” said American Trucking Associations President and CEO Chris Spear. “We also disagree with certain provisions—especially those related to labor—that are counterproductive to economic growth and will only serve as political poison pills. However, the president’s broader plan is an important marker as Congress begins work on a surface transportation reauthorization bill. ATA recognizes this is the beginning of the legislative process, not the end.”

By Tim Triplett, Tim@SteelMarketUpdate.com