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What The Infrastructure Bill Could Mean For The Transport Sector

President Biden recently unveiled an infrastructure proposal that will deliver a “once-in-a-generation” investment to the United States.

This bill follows the Covid Relief Bill which passed Congress in early March and is expected to cost $2 trillion, funded by an increase in the corporate tax to 28% from its current rate at 21%.

The funding is expected to be spent over 8 years, with the $2 trillion expected to take 15 years to raise through the corporate taxes.

America is visibly falling behind other countries when it comes to public investment. For example, visitors from Beijing or Shanghai will notice how lacklustre American airports and city grids are in comparison to their own. China is proving that modern infrastructure is an essential component of industrial competitiveness and economic growth.

Spending provisions for the Transport Sector

Total spending on transport infrastructure is estimated at $621 billion which includes:

$174 billion in electric vehicle investments

$115 billion for bridges and roads

$80 billion for railways

$25 billion for airports

$17 billion for waterways and ports of entry

The bill has also set aside $650 billion to improve the quality of life at home, including $213 billion to build, preserve and retrofit more than 2 million affordable homes and commercial buildings. $400 billion is also been provided to improve access to quality, affordable home or community-based care, $300 billion to be invested into manufacturing and $180 billion on research and development with an emphasis on clean energy, fewer emissions and climate change research.

Implications for America’s Railways

$80 billion is the biggest commitment to rail travel in more than a generation and will help to revitalise railways which have previously lacked public investment that is otherwise spent on road and air travel.

The money is set to “address Amtrak’s repair backlog; modernize the high traffic Northeast Corridor; improve existing corridors and connect new city pairs; and enhance grant and loan programs that support passenger and freight rail safety, efficiency, and electrification.”

In light of the Infrastructure Bill, Amtrak, the largest passenger rail provider in America, have proposed an upgrade and expansion of its service across the country. The plans include up to 30 new rail routes as well as more trains on 20 existing routes. Service would begin in cities like Nashville, Tennessee, Columbus Ohio, Phoenix, Arizona and Las Vegas, Nevada, pending approval from Congress.

Biden’s push for improved railways is a positive change following years of cuts, as articulated by Joseph Schwieterman, a DePaul professor who studies rail.

"It's hard to plan new routes and build an efficient network while sitting on the edge of a financial cliff," Schwieterman told CNN Business. "The stars are aligning for rail in ways I haven't seen for a long time."

Current slow trains within the country are a result of a lack of investment in the sector, with Amtrak hoping to increase the speed of trains across their busiest routes.

Jim Mathews, CEO of the Rail Passenger Association, which advocates for rail travel, has said that even an increase in speed from 50 mph to 79 mph would be a meaningful improvement on the American tracks.

"There's a real hunger for something new and for something more," Mathews said. "Rail in this country has been left behind for close to 100 years."

Implications for America’s Airlines

Within the airline industry, the bill would focus on hard investments such as new terminals, better connections and perhaps more runways as well as potentially more jobs as a result. It is subsequently hoped that it would help an industry which has been bashed by the pandemic, to fully recover.

Although the infrastructure bill isn’t aimed at airlines specifically, the airports at which these airlines run from are suspected to see a drastic improvement.

Not one of the 5,080 public airports within America ranks in the top 25 airports worldwide, a feat the bill hopes to change for the better.

American airports are likely to see green changes as the bill contains several references to environmentally friendly options. Airports would also be able to utilise these funds to prepare for busier operations as the sector starts to bounce-back and potentially grow after the pandemic. Providing funds to ensuring smooth operations within airports would subsequently decrease the likelihood of difficulties arising as air traffic picks up.

Implications for America's Trucking Industry

Commercial truck driver jobs are forecast to make some of the biggest gains if the infrastructure package passes congress without major revisions.

Georgetown University Centre on Education and Workforce have recently carried out a report which shows that the package “could put the United States back on a pre-recession job growth path and create and/or save 15 million jobs”.

The US economy is made up of a predicted 12% of infrastructure jobs prior to the pandemic, with the bill expected to increase this to equate to 14% of the total job market. As transportation and materials moving make up 60% of infrastructure related occupations, 20% of Biden’s bill accounts for trucking jobs to either be created or saved.

To add, the bill would give the trucking industry a chance to create a zero-emissions future, with priorities including a push towards zero-emission vehicles of all sizes.

American Chemistry Council President and CEO Chris Jahn has said that he looks forward to the bill bringing “trucking regulations into the 21st century so that our industry can deliver essential products Americans depend on every day”.

Opinions on the Infrastructure Bill

Although the bill will provide a number of opportunities within the transport sector in America, it hasn’t come without its critics.

Mississippi Gov. Tate Reeves told CNN that the plan “looks like a $2 trillion tax hike to me”. The tax provision has also been criticised by American Chemistry Council President and CEO Chris Jahn, who relies on transportation infrastructure to move his goods around the country each day. He added that it could “make America less competitive, stifle innovation and interfere with our ability to invest, innovate, create jobs, and provide technologies that will be critical to infrastructure improvement, clean energy and climate solutions.”

Republican Sen. Roy Blunt of Missouri has also criticized the bill, urging Biden to cut it to $615 billion and to just focus on physical infrastructure within the bill. In an interview with Fox News on Sunday, Blunt argued that only 30% of the bill focuses on traditional infrastructure and said that reducing its cost would enable the bill to pass both chambers of Congress with more ease.

Soy Transportation Coalition Executive Director Mike Steenhoek also demonstrated his concerns on the breadth that the bill covers.

“Given how Republicans and Democrats overall agree that improving infrastructure is a legitimate use of government resources, there is a unique opportunity to achieve something significant on behalf of the American people in a collaborative, bipartisan manner if the focus remains on enhancing roads, bridges, inland waterways, ports, railroads, etc.” Steenhoek said. “It does concern me to see the proposal extend beyond what most Americans would define as ‘infrastructure.’ Whenever legislative proposals and initiatives — especially controversial ones — get attached to a particular plan, the prospects of ultimate passage usually go down rather than up.”

To contrast, the bill has also been praised by many.

Vermont Sen. Bernie Sanders said that “I think it’s a serious proposal dealing with some of the serious crises that we face”.

Moody’s Analytics chief economist Mark Zandi has also studied the bill. He argues that, although the bill may slow down the American economy in the short term, by 2024 the infrastructure boost is expected to grow GDP by 3.8%.

Implementation of the bill largely comes down to the ruling of Senate parliamentarian Elizabeth MacDonough, the arbiter or what is – and is not – allowed under Senate arcane rules. If she gives the Democrats the green light with the bare majority that they hope for, the bill will narrowly pass without fear of negative repercussions on future ambitions.

For now, the transport sector waits with bated breath on the outcome of the Infrastructure Bill's implementation.

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