Infrastructure Deal to Benefit Road Builders the most

Infrastructure deal to benefit road builders the most

President Joe Biden promised to invest $2.3 trillion in roads, bridges, clean energy, and other initiatives during his election campaign and contractors began to wonder what they could expect under the new administration. The Republicans came up with an alternative proposal totalling $568 billion. Regardless of which plan we go with, road and bridge construction will benefit the most over the next five years.

According to The Washington Post, comparisons between the two infrastructure plans are tricky, but Biden's plan is significantly bigger than what the Republicans are calling for. Senate Republicans outlined a counterproposal to President Biden's American Jobs Plan and emphasized transportation networks, water systems and broadband internet.

On transportation funding, the two plans at first glance might not look that different since both propose something close to a half-trillion dollars in spending. However, there is a key difference. Congress usually passes long-term transportation funding bills worth about $300 billion over five years. Between 2016 and 2020, Congress provided the $300 billion for roads, transit and rail, with a separate measure funding airports. The Biden plan expects that Congress will still continue to provide at least that much money in the coming years. But the Republican proposal includes that $300 billion as part of its total.


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There are also major elements of Biden's plan that Republicans are not proposing to fund or which don't neatly compare with existing transportation spending. That includes the following:


 - $100 billion in incentives for people to buy electric vehicles

 - $20 billion to pay for electric school buses

 - $25 billion to aid minority communities harmed by past infrastructure spending

 - $25 billion program to fund the largest of transportation projects


Jeff Davis, a senior fellow at the Eno Center for Transportation, a Washington based nonprofit that analyzes transportation policy, examined what Biden and Senate Republications are proposing to spend on roads, transit, rail, airports and safety programs over five years, calculating the numbers at $720 billion and $437 billion. Here's how the five-year spending breaks down:


Roads and bridges

Biden plan: $383.5 billion

GOP plan: $299 billion

(Current level: $260.5 billion)


Biden plan: $178.8 billion

GOP plan: $61 billion

(Current level: $68.8 billion)


Biden plan: $95.3 billion

GOP plan: $20 billion

(Current level: $15.3 billion)


Biden plan: $39.7 billion

GOP plan: $44 billion

(Current level: $19.7 billion)


Biden plan: $22.8 billion

GOP plan: $13 billion

(Current level: $10.8 billion)


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Construction Dive states that it's clear that the new infrastructure deal will benefit road builders the most, with a substantial amount of money directed that way to be spent over the next five years. Still, environmental public works projects come second with a considerable boost they will receive. The American Jobs Plan accounts for $128 billion that will go into this category. The Republican plan designates around $50 billion for these projects. 

Strategic Wealth Partners President and CEO, Mark Tepper, told CNBC that there will be numerous benefits from new roads, bridges, and modernized airports. And the staff at agree, as would anyone whose work relies on good quality roads and solid infrastructure. But, looking at the industrials, we can already see all the positive information reflected in the stock price. Tepper gave the example of Caterpillar stock. This industrial equipment giant is certain to benefit from a good infrastructure plan. Still, compared to the bottom it hit in March 2020, it has already risen to 130%.

Vulcan Materials is another example. It is America's biggest producer of construction aggregates. It's stock is about 5% higher than it was before Covid-19 hit. And it is bound to benefit whether the huge American Jobs Plan is passed or the situation keeps running in the maintenance mode.

As a CNN article states, the US infrastructure is in desperate need of repair. Whichever shape or form the new plan takes, it will be more than welcome. Biden's ambitious suggestion sure sounds very tantalizing. However, it is questionable whether it will pass as is. There is also the question of how Biden plans to pay for this plan. Undoubtedly, there would be some tax modifications. Regardless, we can expect some kind of an infrastructure bill to pass in Congress by the end of this year, and we can also expect road builders to benefit from it the most and that is unquestionably good news. 


Posted by Judy Lamelza

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