Hey Influence Traders,
Well, it’s finally here, the unveiling of Joseph R. Biden’s initial infrastructure bill.
He’s made no bones about wanting to be the next FDR or LBJ, and he took a step in that direction today.
One of my Power Moves pillars is that there’s a revolving door of insiders moving between the public and private sectors.
Sometimes those movements get truly circular.
Readers often ask me for examples, and a great one came up this week …
BlackRock named Paul Bodnar to lead sustainable investing.
Normally, that might not raise many eyebrows, but a couple of things stand out:
- First, he will be based in Washington, D.C. … Makes for a cozy relationship with the administration.
- BlackRock CEO Larry Fink has pledged that BlackRock will push the economy to eliminate greenhouse gas emissions by 2050.
- Moreover, Blackrock’s Aladdin Climate service provides climate risk data for portfolio managers to incorporate into their trading … that will increasingly influence a large swath of the asset management industry.
- Second, Bodnar is a former Obama administration aide who was a senior director for energy and climate change on the National Security Council. In that role he developed strategy for the 2015 Paris Climate Conference.
- One of Biden’s priorities is green energy and addressing climate change.
- The infrastructure bill leans towards promoting green initiatives.
- Third, he is replacing Brian Deese, with whom he worked in the Obama administration.
- Deese is leaving BlackRock because he has been tapped by Biden to be director of the National Economic Council.
They will literally pass each other in the hallway!
These maneuvers demonstrate both the tangled movement of insiders between K Street and Wall Street, as well as how that movement marries K Street goals to Wall Street.
These players will allow the administration to more easily use the private industry to assist in achieving its policy goals.
Infrastructure Bill Unveiled
The talk of the day, of course, was the unveiling of the Biden infrastructure plan.
Joe Biden has not been shy about wanting to impact the nation’s economy and social fabric to an extent similar to FDR … and he did not disappoint.
At yesterday’s announcement, he described the proposal as a once-in-a-generation plan for the U.S.
He went so far as to compare the money that will be spent under his plan to the spending on the 1950s interstate highway system and the 1960s race to the moon.
Titled the American Jobs Plan, the more than $2 trillion proposal is intended to aggressively improve the nation's infrastructure and shift to greener energy over the next eight years.
The plan, among other things, promises to modernize highways and fix bridges.
It will also replace thousands of buses and rail cars, repair hundreds of stations, renew airports and expand transit and rail into new communities.
In addition, it will deliver clean drinking water, a renewed electric grid and high-speed broadband to all Americans — including bringing affordable, reliable, high-speed broadband to every American, particularly those in rural America who lack access.
Before I dive in, as I previously stated, what was laid out today is part one of a two-part proposal, with the second part coming in mid-April.
Part two will focus on “helping families with challenges like health care costs, childcare and education,” the White House said, and will be called the “American Family Plan.”
Part one, though, includes $620 billion for transportation. Biden stated that improving roads, bridges, railways and other infrastructure will create “really good-paying jobs" and help the nation to better compete.
Biden is calling for $115 billion to modernize 20,000 miles of highways, roads and main streets, and $20 billion to improve road safety, specifically fixing the “most economically significant large bridges" and repairing the worst 10,000 smaller bridges.
He wants to use $85 billion to modernize existing transit, particularly in disadvantaged areas, and $80 billion to modernize and expand Amtrak.
He will spend $25 billion on airports and $17 billion on inland waterways, ports and ferries.
The bill includes $580 billion for manufacturing, including $180 billion for non-defense research and development, such as climate science.
To ensure that the U.S. stays competitive with China, the bill proposes $50 billion for domestic semiconductor manufacturing and $40 billion to upgrade laboratory research.
$400 billion will go to how care workers to bolster wages and caregiving for aging and disabled Americans.
$111 billion will rebuild the country's water infrastructure.
Biden wants to replace all of the nation's lead pipes and service lines in order to improve the health of American children and communities of color.
$100 billion will build new public schools and upgrade existing buildings.
100% Digital Coverage
$100 billion will ensure that every American has access to affordable, reliable and high-speed broadband.
Biden wants to build a network that provides 100% coverage across the nation.
Climate is Front and Center
Biden wants to accelerate the shift to electric vehicles, so $174 billion will be invested in the electric vehicle market, including rebates and tax incentives to buy American-made electric vehicles and building a national network of 500,000 charging stations by 2030.
Biden also wants to replace 50,000 diesel transit vehicles and electrify at least 20% of yellow school buses.
The plan also calls for $213 billion to go towards building, renovating and retrofitting more than two million homes and housing units.
What About Laid Off Workers?
The proposal allocates $100 billion to workforce development, including $40 billion to retrain dislocated workers in high-demand sectors such as clean energy, manufacturing and caregiving.
The administration claimed that the plan will put hundreds of thousands of people to work laying thousands of miles of transmission lines and capping hundreds of thousands of orphan oil and gas wells and abandoned mines.
It’s a clear nod to the understanding that many in the fossil fuel industry could be laid off.
Corporate Taxes are Rising
Biden wants to pay for this bill with taxes, not debt, and that means the US corporate tax rate is going from 21% to 28%.
I saw one “news” publication naively refer to that hike as a 7% rise in the corporate rate …
To be clear, it is a 33% hike in corporate taxes.
The rate might be moving 7 percentage points, but it’s a 33% hike.
In addition, the plan will create a 21% global minimum tax on US corporations to deter companies from sheltering profits in international tax havens.
The plan will also levy a 15% minimum tax on the income the largest corporations report to investors, known as book income, as opposed to the income reported to the IRS.
None of this is a done deal … an epic battle is lining up in Congress … on all sides of the aisle.
Senate Minority Leader McConnell described the bill as “a Trojan Horse that’s called infrastructure,” and that “inside the Trojan Horse is going to be more borrowed money and massive tax increases on all of the productive parts of our economy.”
But don’t worry, individual taxpayers, Part 2 will be paid for with tax hikes on wealthy Americans!
Cutting Through the Noise for You.