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The Infrastructure Investment and Jobs Act Was Passed by Congress – What Does This Imply for Investors?

The Infrastructure Investment and Jobs Act Was Passed by Congress

The House passed the Infrastructure Investment and Jobs Act (IIJA, Bipartisan Infrastructure Bill) with a vote of 228-206 on Friday, November 5th, sending it to President Biden’s desk for signature.

The bill remained in the House awaiting a vote after passing the Senate in early August, while moderate and progressive Democrats worked out the details of an additional reconciliation bill (the Build Back Better Act, BBBA) that would invest in clean energy and social infrastructure. Progressives were hesitant to vote for the IIJA until the Build Back Better Act was finalized and secured, which both party groups were (and still are) divided on.

Last week, however, enough progressives expressed support for the bipartisan package for Speaker Pelosi to feel comfortable bringing it to a vote after moderates stated their specific determination to reach an agreement on the second bill. As Democrats make headway on the BBBA, President Biden is expected to sign the IIJA into law in the coming weeks.

The Infrastructure Investment and Jobs Act

The IIJA was passed unchanged from the Senate bill enacted in August. Over the following ten years, the law includes $550 billion in increased funding. Other offsets include tighter IRS enforcement and recouping fraudulent or unused unemployment insurance payments. Repurposed COVID-19 relief funds will pay for $205 billion of the bill, while other offsets include tighter IRS enforcement and recouping fraudulent or unused unemployment insurance payments. The measure allocates funds to the following areas:

Transportation & Transit

Roads, Bridges, and Highways ($121 billion): Provides new funding for roads, bridges, and highways, as well as related transportation projects. This includes money for infrastructure repair and upgrades, as well as investments in connected cars, sensor-based infrastructure, transit integration, commerce delivery and logistics, smart traffic, and smart grids.

Rail ($66 billion): Expands Amtrak and handles its backlog, modernizes the Northeast Corridor rail line and expands rail’s access to new areas, including cities.

Public Transportation ($47 billion): Upgrades bus and train fleets, replacing many with zero-emission vehicles, expanding public transportation to places where it is currently unavailable, and improving supporting transit infrastructure.

Airports ($25 billion): Expands airport terminal capacity and accessibility, replace old airport infrastructure, and upgrades air traffic control towers and technology.

Ports & Waterways ($17 billion): Electrifies port infrastructure, improves port efficiency, and invests in initiatives that make ports more resilient to rising sea levels, flooding, and extreme weather.

CleanTech & Clean Energy

Power Infrastructure and Clean Energy ($73 billion): Supports smart grid and battery storage, green hydrogen, carbon capture technology, hydropower, wind power, and solar power deployment.

Charging Stations for Electric Vehicles (over $7.5 billion): Develops electric car charging infrastructure, with a particular emphasis on highway corridors, towns and cities, and hard-to-reach rural or underprivileged locations.

Buses and ferries with Low Emissions (over $7.5 billion): Funds the purchase of electric and low-emission buses and ferries.

Environmental Remediation & Water Infrastructure

Water Supply, Distribution, and Storage ($63 billion) — Replaces lead pipes, funds wastewater, and invests in water treatment, monitoring, and sustainability. More money is being put into water storage, recycling, and desalination technology.

Environmental Remediation ($21 billion) — Cleans up superfund and brownfield sites, as well as plugging orphaned oil/gas wells, to address the effects of legacy contamination.

Resilience and Digital Infrastructure

Broadband ($65 billion) — Increases the number of people who have access to broadband internet by requiring high-speed download/upload speeds and low latency to allow real-time applications.

Cybersecurity and Resistance ($50 billion) — Strengthens the country’s resilience to cyberattacks, focusing on transportation, power grids, and water infrastructure. Improves the physical infrastructure’s resilience to the effects of climate change.

Reconciliation Bill (Build Back Better Act)

The most recent version of the Build Back Better Act (BBBA) proposes spending $1.75 trillion, with $555 billion going to combat climate change and clean energy, $400 billion to childcare and preschool, $200 billion to expanded child and earned income tax credits, $150 billion to affordable housing, $150 billion to in-home care access, $130 billion to Medicaid and Affordable Care Act subsidy expansion, and $40 billion to worker training and higher education.

Now that the Build Back Better reconciliation package has been detached from the IIJA, the timing for it is more flexible. House Democrats adopted the rules for debate on the plan on Saturday (11/6), but they refused to schedule a vote before the Congressional Budget Office (CBO) had a chance to assess the package’s economic impact. The CBO might release forecasts as early as November 15, three days before the House leaves for the Thanksgiving holiday.

Democrats would only have 10 legislative days after returning from recess to advance the plan through the House and Senate if they hope to pass it by the end of the year. Even though House Democrats are working on a plan that will satisfy Senate moderates Joe Manchin and Kyrsten Sinema, Senator Manchin recently stated that he may fight for big revisions to the framework.

This might cause a delay in the bill’s passage because any modifications made in the Senate would send it back to the House for approval. Impending deadlines for federal funding and the debt ceiling will further stymie progress, with federal financing and the government’s capacity to pay down debt both set to expire on December 3rd.

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The reconciliation package is unlikely to pass until December due to frequent congressional absences and competing deadlines.

Global X ETFs, on the other hand, feel Democrats are bargaining in good faith. Moderates have pledged to advocate for a reconciliation plan, and we remain hopeful that both Democratic factions will reach an accord.

Investing in U.S. Infrastructure Development

In the United States, infrastructure is chronically underfunded and deteriorating. The Infrastructure Investment and Jobs Act is the largest in the country’s history, and it will address these challenges for many years to come.

The Build Back Better Plan’s potential for further spending on renewable energy and social infrastructure might take this a step further. Such spending, in our opinion, will result in revenue for infrastructure development corporations that draw a large portion of their revenue from the United States.

Additionally, this spending could result in increased sales and positive sentiment for companies involved in clean water, hydrogen, renewable energy production + cleantech, autonomous and electric vehicles, the Internet of Things, cybersecurity, and data centers, and digital infrastructure.

Expected Beneficiaries of U.S. Infrastructure Spending

Construction and engineering firms that plan, design, and build infrastructure for transportation and transit, housing, power, and clean energy infrastructure, water infrastructure, and digital infrastructure may enjoy increased income as a result of this spending.

Companies who manufacture, distribute, or lease products and equipment that are used as components in any of the aforementioned infrastructure areas could benefit from large-scale public funding:

Products related to mixing and paving asphalt/concrete, as well as traffic management, signage, and safety for roads, highways, and bridges; railcars, barges, axles/couplers, and other products used in waterways, rail, and public transit; and construction equipment such as cranes, aerial work platforms, and materials-handling and earthmoving vehicles/equipment

Power transmission and electrification products, such as electrical wiring, connectors, insulators, meters and measurement systems, power structures and distribution poles, transformers, circuit breakers, enclosures, arresters and bushings, electric control boxes and related components; electric vehicle charging station components; and clean energy components, such as structural wind towers, are all relevant products.

Water distribution pipes and protective lining, pumps, valves, water meters, filtration systems, and membranes are all examples of relevant products.

Wiring and cables for data and related power transmission, connectors, contacts, and communication towers, and related components are all relevant products.

Companies who make or supply raw materials, composites (or chemicals) that are used in infrastructure throughout the above infrastructure domains may be able to generate new revenue as a result of the bill’s spending.

Concrete and asphalt for roads, highways, bridges and transportation structures; aggregates that make up composites like concrete/asphalt or are used as stand-alone materials; and metals like steel and aluminum used in structures and for reinforcement across transportation infrastructure are all relevant materials and composites.

Power transmission and electrification products, such as electrical wiring, connectors, insulators, meters and measurement systems, power structures and distribution poles, transformers, circuit breakers, enclosures, arresters and bushings, electric control boxes and related components; electric vehicle charging station components; and clean energy components, such as structural wind towers, are all relevant products.

Water distribution pipes and protective lining, pumps, valves, water meters, filtration systems, and membranes are all examples of relevant products.

Metals and alloys such as copper, aluminum, and other metals used in data transmission cables, as well as steel and aluminum for communications towers, are examples of relevant materials and composites.

Companies that transport products, equipment, and materials utilized in transportation infrastructure projects may benefit from increased freight volumes destined for infrastructure projects.

Transportation & Transit: Industrial transportation corporations may gain in the long run by the government footing the bill for billions of dollars in capital expenditures on the rail networks they operate on, as well as enlarged networks allowing for the implementation of new technologies and increased Freight delivery.

Other Expected Thematic Beneficiaries

Funding directed to linked autos, sensor-based infrastructure, transit integration, commerce delivery, and logistics, and smart traffic could assist the Internet of Things and Autonomous & Electric Vehicles themes.

Increased electrification and emissions reduction initiatives across transportation areas, as well as improvements in energy efficiency and investment for smart grids, could boost the CleanTech, Renewable Energy, and Autonomous & Electric Vehicles, Hydrogen themes.

Federal support and/or investment in clean energy sources and green hydrogen could benefit the Renewable Energy and Hydrogen topics.

Investment in clean water infrastructures, such as federal investments in water distribution, water filtration and treatment, wastewater management, and novel water extraction methods like desalination, could boost the Clean Water theme.

Increased spending on cybersecurity and digital infrastructure, such as broadband, could assist the Cybersecurity and Digital Infrastructure themes.

The Author

Samuel Adeshina

Samuel is a financial reporter whose interests include blockchain, market, business, insurance, and Crypto to provide relevant information to all interested.