Now that Joe Biden is President and Democrats have gained a slim majority in the Senate, in addition to holding onto the House, experts ask if Congress is ready to pass a large infrastructure spending bill to help boost the economy.
President Joe Biden’s nominee for Secretary of Transportation, Pete Buttigieg, appears on a smooth path to quick confirmation. He pledged to help carry out the administration’s ambitious agenda to rebuild the nation’s infrastructure during his nomination hearing Thursday.
Sen. Roger Wicker (R-MS) chaired the Commerce Committee hearing for a last time as the Senate finalized its transfer of power to Democrats. Wicker signaled likely challenges in finding ways to pay for a costly infrastructure overhaul, but said he looked forward to working with Buttigieg. “I’m quite certain he will be confirmed,” reported the Associated Press.
The Biden Administration is expected to outline full details of the plan next month. Biden has yet to specify how he intends to pay for new infrastructure spending.
“With the slim majority the Democrats have in the Senate, infrastructure spending is probably going to be one of the less controversial measures and could be implemented,” Gautam Khanna, senior portfolio manager with Insight Investment, told CNN. “A $1.5 trillion to $2 trillion package — somewhere in that zone — could get through.”
However, Biden and other political leaders are likely to prioritize more stimulus for consumers and businesses struggling due to the COVID-19 pandemic before tackling any new infrastructure initiatives.
But economists and investing experts believe that spending more to rebuild roads and bridges, as well as building out 5G network infrastructure, could also help provide jobs and boost the economy. Hank Smith, head of investment strategy at Haverford Trust, said: “A bipartisan agreement could be an easy, early win for Biden and a net positive for the economy.”
Josh Duitz, portfolio manager of the Aberdeen Standard Global Infrastructure Income Fund, says increased investments in 5G will be critical to help bridge the digital divide. That’s why his fund owns stock in American Tower (AMT) and Crown Castle (CCI) as well as fiber-optic construction firm Dycom (DY).
“Broadband needs to be part of a new infrastructure bill. It’s an essential service, especially as more people work from home,” Dultz told CNN.
Nick Langley, portfolio manager at ClearBridge Investments, said tower company SBA (SBAC) and utilities Clearway (CWEN) and Brookfield Renewable Partners (BEP) could also be a beneficiary of a Biden infrastructure plan.
Still, there are questions about whether Congress will be willing to approve a big infrastructure package. There are concerns among some Republicans about the rising debt load. And the Democrats have a razor-thin majority in the Senate.
“The question with infrastructure is ‘will you have broad-based support,’” Khanna said. “Politicians will need to show it benefits society and taxpayers at large and can improve the economy and make it more productive.”
But even if Biden and other Democrats are able to make that case, they will still need to convince enough Republicans to support a big spending package. That may not be easy.
“It’s going to be complicated economically, not to mention politically, to get much more spending on infrastructure,” said Bob Doll, senior portfolio manager and chief equity strategist at Nuveen.
“Are the probabilities of something passing higher today than four years ago? Yes. But it’s not definite,” Doll added. “To varying degrees, people want an infrastructure bill. But what’s in it, what the size of it is and how you pay for it could be very different.”