Finance

Biden’s trillion for infrastructure is again delayed: ‘Plan is held hostage’

1. What exactly does Biden want?

The president has been fighting a political battle for a very large infrastructure package for almost a year. That consists of investments totaling one trillion dollars, or a thousand billion dollars (yes, that’s twelve zeros).

All that money is intended to finally tackle the infrastructure in the fifty American states. Examples include roads, bridges and tunnels ($110 billion), the electricity grid (73 billion), broadband internet (65 billion), ports and airports (42 billion) and charging stations for electric cars (7.5 billion).

Facilities that are often in very poor condition, says correspondent Erik Mouthaan from New York. “There has been no investment in maintenance for years. For example, there are more than two hundred bridges that engineers say must be replaced immediately. Plus the weather is much more extreme here, which has more impact on the infrastructure.”

And so both Democrats and Republicans agree on this plan. In August, the US Senate agreed.

2. What are they waiting for then?

That has to do with an even larger package of investments that a part of Biden’s own Democratic party wants to enforce. That package consists of no less than $3.5 trillion in investments in things like education, health care, climate and fighting income inequality.

“It has become a complicated political joust,” said analyst Philip Marey, who tracks the US economy for Rabobank and wrote an analysis of the deadlock. “The progressive left wing of the Democrats, which is needed for a majority, will only agree to the infrastructure package if the larger package also gets approval.”

Only for the large package there is now no majority in the House of Representatives, comparable to our House of Representatives. And so, last night, President Nancy Pelosi decided to postpone the vote on the infrastructure package again. Marey: “It’s purely a conflict within the Democratic Party. The plan has been held hostage by the left wing. For them at the moment it’s both, or neither.”

Mouthaan made this report this spring about the poor state of the American infrastructure.

3. Can it all still go wrong?

Since the Senate has already agreed and only part of the House of Representatives is obstructing, Mouthaan expects the plan to be approved. “I suspect that the bigger package will eventually be watered down. Because the progressive Democrats also know that this is their moment: an American president only has two years to get something done. In the midterm elections [november 2022 – red.] a president usually loses his majority in parliament.”

Meanwhile, another deadline is fast approaching. Before October 18, the US must make a decision about raising its debt ceiling. That is necessary to make all the desired investments possible at all, but is again blocked by the Republicans, who thus thwart the Democratic plans.

This debt ceiling determines the maximum limit that the country can legally borrow before it gets into financial trouble and can no longer pay off its debts. Which would lead to less confidence, lower creditworthiness, and at worst a financial crisis.

4. If all goes well, can Dutch companies benefit from it?

Although investment is predominantly an American affair, that does not mean that the Americans can make it on their own. They do not always have the knowledge, especially in the field of infrastructure.

Since the projects are put out to tender domestically (federally), Dutch companies in particular can join in with an American partner. “Think of companies with knowledge of civil engineering”, says Marey. “But also to entrepreneurs in the field of installation and electrical engineering. A wide range of companies can benefit in this way. The Netherlands also has a lot of logistics knowledge in-house, we know how to set up these types of projects.”

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