What industries benefit from Joe Biden's infrastructure bill?

1309
7
What industries benefit from Joe Biden's infrastructure bill?

the Senate approved a $1.2 trillion proposal to improve the nation's aging infrastructure on Tuesday, offering hope of a historic boost to several industries that stand to benefit from increased funding and regulations. While the bill must still clear the House, where it faces a rocky path over the next few weeks, the Senate outcome marks another major step forward in President Joe Biden's economic agenda as the nation recovers from labor constraints and financial losses due to the pandemic.

The White House anticipates that the bill will add approximately 2 million jobs per year to American workers, and initiatives are expected to last over the course of a decade.

What industries benefit from the provisions of the Infrastructure Bill in its current form, and which don't?

Cable and fiber-optic internet companies fare well under the $100 billion bill, which allocates $65 billion to improve access for low-income and isolated communities.

Home Internet providers like AT&T and Charter Communications would receive about $40 billion in grants to expand their networks to rural areas. An additional $14.8 billion in emergency funding would help cover the cost of broadband for low-income Americans — around $30 a month. Both of these initiatives would increase the number of households which could eventually be full paying customers, benefiting the telecom industry in the long term.

These grants may but in doing so can make it harder for new tech to keep up with the competition, stifling innovation in high-speed internet technology. SpaceX, for instance, launched hundreds of low-cost satellites into earth orbit in an attempt to offer high-speed, space based internet to rural areas — and could now have to compete with government-funded providers.

Big telecom companies stand to benefit from these provisions, even though a mandate to prevent practices known as 'digital redlining' could prove costly by ensuring service providers don't discriminate in where they expand networks.

With 230 billion in new funding for transit systems and ports of entry, supply chain and parcel industries like Amazon, FedEx and UPS will reap the benefits without having to pay for using those new roads and ports.

That's because the bill does not include a hike in the corporate tax rate to offset costs, which Biden proposed. Instead, funding comes from unspent federal unemployment insurance funds, unearthed coronavirus relief money and repurposed programs, among other sources.

Amazon, Fedex and UPS are relying on the nation's highways to deliver goods. Increased spending on ports can also help grow the global e-commerce sector.

The bill's $15.5 billion investment to build electric vehicle charging stations across the country would provide a modest boom for the rapidly expanding electric vehicle industry. Elon Musk said the company plans to open its charging stations to other manufacturers’ vehicles this year, which could make it eligible to receive some of the funds.

There are more than 43,600 EV charging stations in the U.S. around 5,300 of which are fast chargers, according to the Department of Energy. As automakers like General Motors heavily invest in improving performance and quality of its EVs, building and operating their own charging networks could be financially challenging — meaning this federal investment in charging stations would be a crucial step forward for all players in the industry.

Although Biden sought much more funding for electric vehicles, another large investment could come later this year as the House will vote in two weeks on a second, far-more expensive package that will include clean energy initiatives.

Building the nation's electric infrastructure including roads, bridges, pipes, electric wires and rails requires an enormous amount of steel, aluminum & copper. With approximately $550 billion of new federal spending towards commodity-intensive infrastructure projects, demand for metals is expected to increase — particularly a win for the steel industry, which is already priced at record highs and will be heavily relied on to rebuild infrastructure.

Other building materials, such as cement and lumber, could also be used for construction projects under the bill.

Increased investment in nuclear energy would be a big win for operators like Exelon Corporation and uranium miners. The nuclear power industry produces 20% of the nation's electricity, however cheaper electricity produced using natural gas and renewable sources has forced some reactors to close.

Despite calls from progressives to invest in renewable energy sources like solar and wind power, the bill aims to boost the struggling nuclear power industry through a four-year program of $6 billion by 2030.

In an effort to eliminate toxic waste, the bill revives a 'Superfund Tax' on chemical producers that can increase costs for plant operations. Fees would be imposed on 42 chemicals, including many of the materials needed for infrastructure and climate improvements — such as plastics and other synthetics — at double the rates in place when the tax expired in 1995

The revived taxes would be imposed until December 31, 2031 and apply to the production and imports of several chemicals that harm the environment when released, such as methane, butane, benzene, toluene, xylene, ethylene, propylene, butadiene, butylene and acetylene. Under the bill, chemical producers would be charged $9.74 ton, except for methane production at $6.88 ton. Also, taxes on many other common chemicals such as chlorine, ammonia, phosphorus, hydrogen fluoride and sulfuric acid could be imposed.

In total, this superfund tax is expected to cost the American chemical industry more than $1.2 billion per year and the added costs could exceed profit margins for some chemicals and plant operations. During Senate discussions, Texas Senator Ted Cruz warned that some manufacturing plants could be forced to move overseas or close due to the cost of raw materials that depend on taxed chemicals. The prices of consumer goods could also be impacted by the regulation.

Although some legislators believe cryptocurrency as a source of innovation, industry leaders fear the bill presents an obstacle to growth. The bill would introduce stricter reporting requirements for cryptocurrency brokers, mandating brokers to report gains and transactions of more than $10,000 to the Internal Revenue Service similar to stockbroking practices.

However, some companies that seem fall under the new law, such as cryptocurrency miners, developers and stakers, don't have access to the financial information they'd be asked to report since they lack customers – which presents a possible challenge to the growing industry.

Leaders also fear that the bill would pave the way for tighter regulation of cryptocurrency, as the plan is estimated to bring about $28 billion in tax revenue over 10 years.

In 2019 government data shows Medicare spent more than $752 million to turn over unused drugs. More than a third of that spending came from four drug makers alone – Takeda, Roche, Amgen and Bristol Myers Squibb. The drug Takeda's Velcade treatment, which treats mellodystrophy, a bone cancer, only sells the drug in 3.5 milligram vials in the United States. Most patients need just a fraction of that — less than 2 milligrams. As a result, Medicare spent more than $114 million to safely disable Velcade in 2019 causing insurance premiums to rise.

In an effort to lower these premiums, the bill directs drugmakers to stop overpacking single use containers in 2023. The bill will require drugmakers to refund Medicare for drug waste, which could force some big pharmaceutical companies and insurers to pay between $100 million to re-export doctors for drugs that are discarded by doctors due to overpackaging. The provision covers some exemptions to this provision — drug that has been covered by Medicare for fewer than 18 months will not be subjected to payment. The money the government raises through this bill would help offset part of the $550 billion in new spending for physical infrastructure projects.