FederalDollars.com is proudly brought to you by Anser Advisory

When it comes to your Federal Dollars

Our mission is to: share information improve practices minimize waste maximize reach stretch impact

federaldollars.com logo_Chris.rev2

The 2021 Infrastructure Investment and Jobs Act: A Technical Analysis


On Friday, November 12th, Congress passed a $1.2 trillion dollar infrastructure package approving a signature part of President Joe Biden’s economic agenda. The following Monday, President Biden signed the 2021 Infrastructure and Jobs Act into law. Biden remarked, “This law is a blue-collar blueprint to rebuild America. It leaves no one behind and marks an inflection point that we face as a nation” . The bill marks a dramatic increase in infrastructure spending through a broad spectrum of programs. It will deliver $550 billion of new federal infrastructure investments over five years, affecting everything from bridges and roads to the nation’s broadband, water, and energy systems. 

Broadly speaking the Act seeks to:

1. Modernize Transportation Systems 

2. Make Investments in Climate, Environmental and Water Infrastructure.

3. Ensure access to High-Speed, Affordable, and Reliable Internet  


Of the $550 billion total, the largest allocation category of $110 billion is set aside for roads and bridges at just over 20 percent of the total. Railroad improvements will receive $66 billion, about 12 percent of total funding which marks a substantial investment in rail compared to previous years. Broadband and Energy Infrastructure projects are set to each receive $65 billion, just under 12 percent of the total investment. Water Infrastructure projects have been allocated $55 billion, just over 10 percent of total funding. Additionally, $50 billion (Nine percent of the total) will go to projects aimed at resilience including $8 billion for wildfires, $3.5 billion for flooding, $3.5 billion for weatherization, and $2 billion for cyber security. The remaining categories of funding include, public transit ($39 billion), Airports ($25 billion), Environment ($21 billion), Ports and Waterways ($17 billion), Road Safety ($11 billion), Potable water ($8 billion), EV charging stations ($7.5 billion), and Electric School busses ($7.5 billion).

The investments are supported through over $200 billion in unused COVID-19 funds in addition to a variety of new revenue mechanisms including delayed Medicare part D references, cryptocurrency reporting, spectrum auctions, and fees on Government Sponsored Enterprises, among others [i]. The spending plan represents a substantial increase in infrastructure funding compared to previous years and the Congressional Budget Office has estimated that the infrastructure portion of President Biden’s “Build Back Better” agenda to be self-sustaining with little impact on the federal deficit.

Infrastructure spending creates numerous positive externalities in addition to the stimulation of jobs and wages. Increased infrastructure investment leads to increased productivity, or the amount of output generated in an average hour of work in the economy. Firms that have no connection to the provision of infrastructure still stand to benefit from faster internet, more safe and efficient transport, shorter commuting times for workers, and other logistics made more efficient through upgraded infrastructure. Economists estimate that the output multiplier for infrastructure investments to be much greater than other forms of fiscal intervention with a longstanding impact in addition to immediate benefits. These investments stand to make the United States, safer, stronger, productive, and more resilient to the impacts of climate change and economic uncertainty. 

The 2021 Infrastructure Investment and Jobs Act, which was enacted in response to the COVID-19 crisis, also serves as a tool for macroeconomic stability. A substantial investment not only creates jobs and useful projects right away, but it can also help stabilize markets following a wide-scale crisis like the COVID-19 pandemic. In this case, the federal government can boost aggregate demand during a downturn to subsidize reduced private demand and help stabilize the economy in line with Keynesian Economic theories. In this way, a substantial investment in infrastructure projects will help avoid a recession, provide utility to the public, and increase productivity for years to come.