Stimulus package part 4: A much-needed infrastructural injection
The federal government is considering a package to improve mass transit, internet access and more amid the novel coronavirus pandemic.
Society has been completely altered due to the global COVID-19 pandemic. But the effects have been more than social and physical: The coronavirus has taken significant casualties from the economy via the closure of nonessential businesses, halt of the travel market, detracted confidence in the stock market and subsequent additions to the national debt.
The federal government recently passed a $2.2 trillion stimulus package to aid this depleted economy. And they do not plan on stopping there.
Speaker of the House Nancy Pelosi and President Donald Trump actually agree on something: It’s to pass another stimulus package focused on improving America’s crumbling infrastructure.
This is not the first time that the Democrat-controlled House has asked the Republican-controlled Senate and White House to pass a significant infrastructure bill. Previous bills have died on funding disagreements, but Trump seems all-in on this round:
So what’s in it? Let’s look at the plan to see how it would affect businesses, the economy and, most importantly, you.
What’s actually in it?
The $760 billion bill, proposed by House Democrats, would designate $329 billion to rebuild highways and roads; this would also fix the 47,000 structurally deficient U.S. bridges. It would invest $105 billion in metropolitan public transportation and $55 billion in railroads — including to modernize Amtrak — and $50.5 billion on clean water and wastewater infrastructure.
An additional $30 billion would be disbursed for airport improvements; $86 billion would aim to expand internet access, especially in rural areas, as well as cushion public schools and housing costs. Pelosi stated that they would add in more money for forthcoming education and housing infrastructure proposals, plus $10 billion for community health centers, funding for voting by mail and state and local governments.
House Democrats asserted an eco-friendly future by focusing on green energy, such as electric vehicles and environmentally safe materials, according to House Transportation Committee chairman Rep. Peter DeFazio from Oregon.
There is optimism on both sides that this will pass, especially with low interests from the Federal Reserve to help stimulate the economy. It comes down to Senate funding, but given Trump’s endorsement, Majority Leader Mitch McConnell may come to an agreement despite saying that he would prefer to wait for the first stimulus package to be fully effected.
Still, the Speaker of the House signaled Friday that the fourth installment of coronavirus relief might come in a form more similar to the most recent stimulus package — directly aiding businesses, state governments and individuals, rather than infrastructure — in a more bipartisan effort to get cash flowing fast.
Why is this necessary?
The American Society of Civil Engineers gave the U.S. infrastructure a D+ in their most recent report card — a.k.a., our infrastructure isn’t holding up so well.
One of the main reasons we got into this predicament was that the fuel tax, which was first implemented in 1932 by Franklin Delano Roosevelt’s administration, was supposed to be used to repair and maintain roads, however we have not seen an increase in it since the beginning of the Clinton administration over 25 years ago. And rising inflation plus years of use take a toll on our funding and structural integrity: The A.S.C.E. says that subpar roads alone cost the American economy more than $100 billion in wasted fuel and time every year with delays and congested travel.
Time is money. Literally.
How would this help companies and the economy?
Improved roads and highways would decrease the time and cost it takes to ship supplies, reducing costs and optimizing production for companies. And employees will have improved commute times, whether by car or public transportation, bolstering efficiency and happiness.
This would also eliminate the annual $100 billion cost on the U.S. economy, perhaps turning it into a net positive. That and investment in infrastructure has proven to provide one of the highest returns. For every dollar spent on infrastructure, gross domestic product (our total economic output) added an additional 59% of its total, according to a 2010 Moody’s Analytics study.
So let’s do the math: If this package is a $2 trillion package like Trump calls for, it would likely have an actual impact of $3.18 trillion on the economy.
Bolstering infrastructure would also put more jobs into the market — a much needed injection, given that a record 6.6 million Americans filed for unemployment last week. Approximately every $125,000 of announced highway spending creates one new job, a 2012 American Economic Journal study found. With a planned $329 billion for highways and roads, that could create more than 2.6 million jobs alone, excluding other industries included.
The investment in public transportation, railways and broadband would also aid in “capital deepening” for the U.S.: capital deepening is the act of giving the economy’s workforce more and better tools. In this case, it would be an increase in travel options, a faster commute and improved access to the internet. Those differences may not seem like a lot, but multiplied by the entire labor force of the U.S. for each and every day, it makes a huge impact and increases our potential production.
How could this affect you personally?
It depends where you’re from. You may see a new community health center. If you are in a rural part of the U.S. with limited telecommunication, you could see an increase in internet access which can help provide job opportunities, telemedicine or an ability to work remotely. People in more urban areas would likely see shorter commute times with better public transportation. Suburbanites could experience shorter commutes into the city with less congestion.
But before it can do any of this, it has to be signed into law. So sit back and wait: We’re not going anywhere anytime soon anyway.
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