Infrastructure Innovation on the Horizon: A Closer Look at the Bipartisan Infrastructure Framework

On June 24, 2021, The Biden administration announced its support for the Bipartisan Infrastructure Framework (BIF). In nearly a century, American infrastructure has not encountered such an extensive bill as the BIF, totaling $579 billion in investments distributed over eight years for a total of $1.2 trillion in funding. The White House articulated that the “$1.2 trillion Bipartisan Infrastructure Framework will make investments in clean transportation infrastructure, clean water infrastructure, universal broadband infrastructure, clean power infrastructure, remediation of legacy pollution, and resilience to the changing climate”. A detailed breakdown of these infrastructure investments is detailed below:

Amount (billions)

Transportation	$312
Roads, bridges, major projects	$109
Safety	$11
Public transit	$49
Passenger and Freight Rail	$66
EV infrastructure	$7.5
Electric buses / transit	$7.5
Reconnecting communities	$1
Airports	$25
Ports & Waterways	$16
Infrastructure Financing	$20
Other Infrastructure	$266
Water infrastructure	$55
Broadband infrastructure	$65
Environmental remediation	$21
Power infrastructure incl. grid authority	$73
Western Water Storage	$5
Resilience	$47

Total Amount Per year is:

$579 Billion

 

The bill will be financed through a combination of closing the tax gap, redirecting unspent emergency relief funds, targeted corporate user fees, and the macroeconomic impact of infrastructure investment. There were a few non-negotiable payment factors that members of the legislative body repeatedly did not agree to, including Senate Minority Leader Mitch McConnell who said, “I think we need to see the bill before we decide whether or not to vote for it”.

Recently, the two parties met again to attempt to conclude the BIF. However, this bill has yet to be agreed upon by both parties. Even though this bill is not passing as effortlessly as some policymakers hoped, senators involved remain confident they’ll get a deal.  The New York Post broadcasted this session and Sen. Rob Portman, R-Ohio, the lead GOP negotiator believes the discussions are “heading in the right direction,”. The White House and Senate Democratic leadership sent Republicans a “global offer” on Sunday night aimed at finishing unresolved items such as highways and bridges, water funding, broadband, Davis-Bacon Act standards, transit, unspent COVID-19 dollars, and an infrastructure bank, says the New York Post. Schumer said on the floor Monday that the Senate may stay in session through the weekend to finish the bill, warning that “further delays may mean that the Senate will remain in session into the previously scheduled August recess.”

As of July, Bipartisan Infrastructure Framework has not been officially accepted by both parties, though members of the Senate aim to finish writing the bill before August.

REMI recently hosted “Assessing the Economic Framework of the Bipartisan Infrastructure Deal,” a webinar presentation that demonstrates how these infrastructure investments will affect the economy long-term and across different geographies and demographic groups. Within this discussion, we explore multiple line items of funding and their potential impacts on regional economies. Included in the presentation is stimulation that describes the potential implications of all funding related to the Bipartisan Infrastructure Framework.

You can learn more about our recent webinar presentation by clicking here.

Please click here to view the official “Bipartisan Infrastructure Framework” report from the White House.

To read more about the cash breakdown for the BIF, please click here.

 

 

The Housing Market Post-COVID

The COVID-19 pandemic drastically changed many elements of the world around us, including the housing market which has experienced major shocks that have impacted the perpetuity of life. Shifts such as technology innovations, access to employment and talent, and the transition to remote work have produced long-term effects on our economy.

Mckinsey and Company published an article discussing the future of work after COVID-19. In January of 2021, they performed an analysis across eight countries that found “20 to 25 percent of the workforces in advanced economies could work from home between three and five days a week”. This percentage is four to five times higher than what it was before the global pandemic. Nearly 40% of workers would consider quitting if their employers made the return to the office full-time says a survey done by the Insider. With this forecast, jobs that cannot offer this telecommuting option are suffering from being understaffed. As remote work becomes preferable, various changes to the geography of both individuals and companies have occurred. These changes have led to fluctuations in housing and job market demands as regional economies are adjusting to the movements of the labor force.

Low-interest rates on mortgages and the increase of working from home contributed to the eruption of the inflating housing market. Housing inventory reached an all-time low of 1.1 month supply in January 2021. Households who desired more spacious homes in suburban areas with city lifestyle perks overwhelmed the housing marketing with home mortgage applications, consequently overcrowding smaller cities as well. For example, Charlotte, North Carolina’s mortgage applications during the first quarter of 2021 increased by 466% year-over-year, according to Better.com. Due to the shortage of houses, the prices increased dramatically. Real estate online resources such as Realtor.com show the national median listing price increased 8.3% between January and April 2021.

Ken Tysiac, an author for the Journal of Accountancy stated, “business leaders will have to overcome the labor shortage by paying higher wages and implementing more automation and self-service options for their customers.” The productivity of companies operating short-staffed may crucially limit the availability of entry-level jobs. “1 in 16 workers will need to find a different occupation by 2030”, says Mckinsey and Company, “workers will need more advanced skills to move to occupations one or even two wage brackets higher.”

REMI recently hosted “Housing and Economic Recovery,” a webinar presentation that featured a study about the implications of the housing market and other economic factors post-COVED on economic recovery. REMI examines the demand of the housing market and its high inflation rate using REMI’s economic models, before interpreting what this means for our economy long-term. You can watch this full discussion here.

To read more about the surveys done by Mckinsey and Company, read here.

You can click here to read Ken Tysiac article about the pandemic recovery.

To find out more about the survey done by the Insider, click here.

The statics gather by Better.com can be viewed here, and the Realtor.com resource can be accessed here.

A New Frontier of Industrial Innovation

Failure to broaden the research, development, design, and manufacturing of emerging technologies will leave the United States at a strategic disadvantage compared to other global powers. The investments specified in the U.S. Innovation and Competition Act have the capacity to create jobs, increase revenue, boost regional economies and distinguish the U.S. as the leader in industrial innovation.

On May 17, 2021, the U.S. Senate passed the United States Innovation and Competition Act (USICA). This bipartisan bill was created to bolster the United States’ competitive edge for developing frontier technologies, which include artificial intelligence, chip manufacturing, space exploration, and state-of-the-art regional innovation hubs.

The USICA outlines approximately $250 billion worth of investments dispersed over the next 5 years. This funding will support several organizations including NASA, the Department of Commerce, the National Science Foundation, and the Department of Energy. The White House publication recounts how The Endless Frontier Act, a component of this bill, aims to “empower us to discover, build, and enhance tomorrow’s most vital technologies — from artificial intelligence, to computer chips, to the lithium batteries used in smart devices and electric vehicles — right here in the United States.” Funding chip manufacturing and R&D investments are two key goals of the Endless Frontier Act. The bill allocates $2 million on chip manufacturing in the hopes of advancing “economic and national security interests,” particularly for the auto industry and defense organizations.

To explore the economic implications of this bill, REMI held “The New Competitive Advantage: Assessing the Impacts of the U.S. Innovation and Competition Act,” a recent webinar presentation that quantifies the economic implications of ground-breaking innovation AI, machine learning, and chip manufacturing using the REMI Tax-PI model. You can view a recording of this recent presentation by clicking here.

You can click here to read the full article from the White House.

A detailed breakdown of all funding allocated in the USICA can be viewed by clicking here.

The full United States Innovation and Competition Act can be viewed here.

Considering a Tax on Carbon

The Biden administration recently unveiled their ambitious goal of reducing America’s greenhouse gas emissions to half of our 2005 level by 2030, which prompted institutions and government officials to deliberate on how the country might hit this new target.

One idea that has continued to surface during the emissions and energy efficiency conversation over the years is the concept of a national fee-and-dividend carbon tax. This proposal has been given new life with the president’s announcement on Earth Day, in addition to the discussions surrounding the prospect of a carbon tax at the state level and even internationally.

An article published in Washington Monthly expanded on the discourse related to a possible carbon tax and provided a recounting of the historical trajectory of carbon tax proposals in this country. There have been numerous obstacles that appeared since the concept arose in the legislative landscape, with both sides of the aisle lending their voices to the ongoing carbon tax dialogue.

As the federal government continues to assess the situation, some states are analyzing how they can get a head start and begin implementing some form of carbon pricing within their borders. New York State, for example, has taken the initiative on climate policy in recent years, as covered by City & State New York, and officials are continuing on this path forward as they evaluate the potential impact of the carbon tax elements within the proposed Climate and Community Investment Act.

This policy would impose a $55 charge on every short ton of carbon dioxide emissions, which could equate to up to $15 billion annually for the Empire State. There are several questions about the bill that need to be addressed before it could have enough support to pass, but experts believe that the uptick of new reforms approved by the state’s government point to a more accepting political atmosphere in which to have meaningful climate discussions.

The concept of a carbon tax has also extended beyond the United States as other countries and international institutions have begun researching and suggesting new requirements that might benefit the world as a whole. According to an article produced by Bloomberg Green, the International Chamber of Shipping approached the United Nations to provide a proposal for a global carbon tax on international freight entities that has support from 90% of the world’s merchant fleet. This would be in conjunction with previous measures implemented to lower emissions from international trade so as to accomplish the overarching carbon reduction goals set at the global level.

The REMI model has been utilized in two studies that analyzed the various impacts of a national carbon tax in both 2014 and 2018 that have often been cited as more organizations urge legislators to consider implementing some type of policy that would aim to reduce emissions in this country. You can read the 2014 report completed by Synapse Energy Economics, Inc. and REMI by clicking here. The 2018 study conducted by FTI Consulting, Inc. can also be accessed by clicking here.

Le-Le Zou, Ph.D. from the Chinese Academy of Sciences will also be joining REMI on May 20th for a special guest webinar that will highlight the research and advancements related to China’s emission reduction progress. You can find more information about this presentation and register to attend Dr. Zou’s discussion next month by clicking here.

If you would like to read the full article published by Washington Monthly, you are welcome to click here.

You can also find City & State New York‘s story about New York’s legislative proposals by clicking here.

Click here to access the Bloomberg Green Article on the proposed international carbon tax and follow these developments as they unfold.

Social Equity & Inclusive Economics

A new focus has emerged in economics and public policy as governments at all levels have started incorporating measures intended to enhance social equity into their planning procedures. Increased access to affordable housing and the reallocation of resources are just some examples of the aspects that are now being considered during the legislative cycle in order to potentially address the deficiencies created by previous domestic policies.

The concern surrounding social inclusion has made its way to the federal government with yesterday’s announcement of the first step of the American Jobs Plan by President Joe Biden. This initial portion of the president’s legislative initiative targets infrastructure improvements across the board, but the second half is expected to be proposed later this month and will aim to fund educational and social programs related to housing, workforce development, racial equity, and more. The New York Times published an article that outlined the various provisions of this infrastructure bill and quantified how many sections of our transportation network stand to be repaired or replaced while alluding to some of the anticipated elements that could be included in the plan’s second step.

At the local level, the COVID-19 pandemic actually afforded the Town of Breckenridge, CO the ability to reevaluate how they plan their tourism activities and future events so that they can become even more inclusive and influential for the surrounding community. The Summit Daily news outlet recently covered the use of a town-wide survey to better assess the overall effectiveness of prior events, as well as the potential implementation of requirements for prospective functions to meet certain equity and sustainability standards before receiving approval.

Meanwhile, some legislators remain hesitant when considering the new push for social equity, updated climate policy, and inclusive economics. Reuters released an article that detailed Republican Senator Pat Toomey’s apprehension toward the Federal Reserve Bank of San Francisco’s research into climate change, income equality, and other social topic areas. Sen. Toomey penned a letter asking for information about the Fed’s examinations, which he believes are detracting from what he sees as their primary analytical concerns and facilitating a social agenda.

REMI was joined in February by Colby Lancelin, Principal Planning Coordinator for the Atlanta Regional Commission, for a guest webinar presentation that explored the long-term economic and demographic changes that were generated by the outbreak of COVID-19. “Pandemic and the Economy: Crisis Diverted?” contained outlines of how to use the REMI model when evaluating various potential scenarios, determining the corresponding outcomes, and assessing how current and future policies might impact regional populations.

Click here to access The New York Times‘s description of the American Jobs Plan.

You can also read the Summit Daily article by clicking here.

To access the Reuters article, you can click here for more information.

Feel free to review the presentation slides and a recording of Mr. Lancelin’s guest webinar on our website by clicking here.