Biden’s Infrastructure Proposal: Passage or Gridlock?

May 19, 2021

by Stephen E. Sandherr

ARLINGTON, VA – At the end of March, President Biden proposed a $2 trillion “physical infrastructure” plan. While there is a lot for the construction industry in this proposal, the funding comes with significant, and troubling, strings attached. As challenging, the President is proposing to pay for the new investments with significant increases to the corporate tax rate. This increase will limit the ability of many businesses to invest in capital construction projects.

The physical infrastructure plan includes significant amounts of money for a broad range of construction projects, but also funds many other, non-construction, programs that fall under a very generous use of the term infrastructure. For example, while the President’s proposal includes roughly $621 billion for transportation “infrastructure,” that sum includes $174 billion for electric vehicles, however it is mostly for the manufacture of these vehicles.

The measure does include $115 billion for highway and bridge improvements. But it does prioritize “fixing them first” which seems to embrace the policy of limiting the construction of new highway, road, or bridge capacity. It would also invest $85 billion in public transit improvements. But this also includes non-construction projects, like the purchase of new busses and train cars. The proposal also allocates $25 billion for airport construction projects, $17 billion for waterways, ports, and ferries, $80 billion for passenger and freight rail improvements, $20 billion for transportation equity and $25 billion for regionally or nationally significant projects.

The Biden infrastructure proposal allocates some $310 billion for utility infrastructure work as well. This includes $110 billion for drinking, waste, and storm water systems, $100 billion for expanding the nation’s broadband network, and $100 billion in new energy investments designed to transition the nation away from fossil fuel consumption. And the measure dedicates another $418 billion for building construction projects, including affordable housing, public school, and community college construction.

All this new funding comes with a lot of strings attached. These strings include the dangerous and destabilizing PRO Act, government mandated project labor agreements, local hiring mandates, and new requirement that firms hire a minimum percentage of their workforce out of registered apprenticeship programs. This last mandate is particularly challenging because most registered apprenticeship programs in the country are affiliated with organized labor since many state and federal officials are resistant to registering open shop apprenticeship programs.

The measure clearly seeks to use the many levers available to the federal government to shift the construction workforce into one that is more unionized than the current workforce. What is less clear, however, is whether the plan has any chance of becoming law as it is currently proposed. Several moderate Democrats, including pivotal West Virginia Senator Joe Manchin, have raised concerns about the cost of the bill and the wisdom of raising corporate tax rates along the levels outlined in the proposal.

Meanwhile, Republicans in Congress have countered with a $600 billion proposal with a narrower definition of infrastructure. The President has met with these Republicans and claims to be interested in negotiating with them. Where that process will lead is anyone’s guess. But at present it does not appear that the President has the votes to go it alone on his proposal.

Moving forward, AGC of America will continue to push for a bipartisan solution that provides much-needed new investments in America’s aging and overburdened infrastructure. At the same time, we are pushing back efforts to use infrastructure to investment to alter the level playing field between open shop and union construction firms. And we remain open to working with both parties to find a way to pay for these new investments that does not undermine private-sector capital investments. All the while our goal remains the same, to make sure the construction industry leads the way in rebuilding our economy.

Stephen E. Sandherr is CEO of the Associated General Contractors of America, Arlington, Va.