- Looking to get some bipartisan support, the Biden administration has reduced the size of its infrastructure proposal to $1.7T from $2.25T. Funding for the package would remain the same - raising the tax rate on wealthy Americans and large companies that can "afford a modest increase to pay for middle-class jobs." The counter-offer is still about triple a competing proposal from Senate Republicans, which recently offered a plan to spend $568B over five years.
- "In our view, this is the art of seeking common ground," White House Press Secretary Jen Psaki told reporters before the weekend. "This proposal exhibits a willingness to come down in size, while also staying firm in areas that are most vital to rebuilding our infrastructure and industries of the future, and making our workforce more competitive with China."
- What changed? The Biden administration agreed to cut the funding request for broadband to match the Republican offer and reduce the proposed investment in roads, bridges and major projects to come closer to the number of the GOP. Some original spending areas on research & development, supply chains, manufacturing and small business would also shift to other legislation efforts like the CHIPS Act and the Endless Frontiers Act. Psaki said the White House will share the complete specifics of the proposal pending the outcome of current discussions and negotiations.
- Go deeper: While both sides agree on the need to update American infrastructure, there's a stark difference between Democrats and Republicans on how economies grow and what effects or outcomes will result from all the spending. The Biden administration feels that the higher investment will result in higher wages and would restore the U.S.'s competitive edge in the world. The GOP is more fearful of long-term inflation and would rather minimize taxes and other barriers for business so that the lower cost leads them hire and expand their investment.
- Stocks that could benefit from an infrastructure package include MasTec (NYSE:MTZ), Vulcan Materials (NYSE:VMC), Aecom (NYSE:ACM), Jacobs Engineering (NYSE:J), Quanta Services (NYSE:PWR), Astec Industries (NASDAQ:ASTE), Construction Partners (NASDAQ:ROAD), Evoqua Water Technologies (NYSE:AQUA), Great Lakes Dredge & Dock (NASDAQ:GLDD), TPI Composites (NASDAQ:TPIC), Sunrun (NASDAQ:RUN) and SolarEdge Technologies (NASDAQ:SEDG), NextEra Energy (NYSE:NEE), Atlantica Sustainable Infrastructure (NASDAQ:AY) and Clearway Energy (NYSE:CWEN).
- Back in April, Energy Secretary Jennifer Granholm said Biden would prefer GOP backing, but was willing to push through the "American Jobs Plan" without bipartisan support.