Infrastructure Bill Advanced with
$550 billion in New Spending

Marty McCarthy, CPA, CCIFP
Focused on You. Dedicated to Your Success.
July 29, 2021

The Senate voted on Wednesday to advance bipartisan infrastructure legislation. By a 67-32 vote, the Senate moved to invoke cloture on a motion to proceed to the legislative vehicle for a bipartisan infrastructure plan. The full bill text has not yet been released, but the deal includes $550 billion in new federal investments in America’s infrastructure.

The infrastructure spending plan is the first of a two-part proposal to help the nation's economy recover from the coronavirus pandemic. President Biden is expected to unveil his package focusing on the "care economy," including investments in education and childcare within the next several weeks.

Although Senate negotiators were celebratory in a post-vote news conference, the bill’s future is already in question in the House. Speaker Nancy Pelosi has vowed not to take it up until after the Senate approves a $3.5 trillion budget reconciliation package that includes many of Biden’s other domestic priorities. House progressives say they are not willing to advance one without the other.

The final version was $29 billion lower than the original $579 billion legislative framework agreed upon by White House and Senate negotiators in June. If passed into law, it would be a one-time supplemental appropriation.

A source familiar with the revisions said the lower topline number resulted in part from decreasing a one-time infusion into public transit systems from $48.5 billion to $39.2 billion. Negotiators also agreed to eliminate a $20 billion infrastructure bank.

A summary released by the White House said the spending would be “financed through a combination of redirecting unspent emergency relief funds, targeted corporate user fees, strengthening tax enforcement when it comes to crypto currencies, and other bipartisan measures, in addition to the revenue generated from higher economic growth as a result of the investments.”

A list of offsets circulating among lobbyists and confirmed by congressional sources included $53 billion from some states returning unused enhanced unemployment insurance benefits, $20 billion from sales of future spectrum auctions, $56 billion in economic growth from a 33% return on investments and $2.9 billion from extending available interest rate smoothing options for defined benefit pension plans.

The offsets also included $49 billion stemming from a partial delay of a Trump-era rule limiting drug manufacturer rebates to pharmacy benefit managers, $8.7 billion from extending statutory sequester cuts to Medicare and $3 billion from requiring drug makers to reimburse Medicare for certain wasted medications.

Another $205 billion would come from repurposing unused COVID-19 relief funds, although three lobbyist sources said that reportedly excludes money set aside for hospitals and medical providers.

The White House summary listed spending provisions included in the deal, headlined by its $110 billion for roads, bridges and major projects.

The deal includes $39 billion for modernizing transit infrastructure and addresses a backlog of rail cars, stations, and tracks that need replacement while improving accessibility, according to the summary.

The White House touted the historic nature of that spending despite the fact that some Democrats had been pushing for even higher levels. The deal also has $66 billion to address Amtrak’s maintenance backlog, modernize its Northeast Corridor and expand rail service to other parts of the country.
The deal — which calls for $944 billion in new and baseline spending over five years, according to a GOP aide close to the negotiations — would devote $7.5 billion to building out a national network of electrical vehicle charging stations, a key agenda item for the Biden administration. It seeks to address climate change while creating domestic manufacturing jobs. The deal also would spend $2.5 billion each for zero-emission buses, low-emission buses, and ferries.

It would spend more than $50 billion on improving the resiliency of U.S. infrastructure to protect against droughts, floods, and other natural disasters, as well as cyberattacks.

It would spend $21 billion on cleaning up polluted areas, including money to reclaim abandoned mines and cap orphaned gas wells. And it would spend $73 billion on upgrading the nation’s power infrastructure, emphasizing renewable energy sources.

It would provide $55 billion for drinking and wastewater infrastructure, with money specifically to replace poisonous lead service lines, and would invest $65 billion in improving access to broadband internet.

Here’s a breakdown on how the money in the bipartisan bill would be allocated as reported by Fox Business:

  • Transportation: $312 billion
  • Roads, bridges, major projects: $109 billion
  • Safety: $11 billion
  • Public transit: $49 billion
  • Passenger and freight rail: $66 billion
  • Electric vehicles: $7.5 billion
  • Electric buses/transit: $7.5 billion
  • Reconnecting communities: $1 billion
  • Airports: $25 billion
  • Ports and waterways: $16 billion
  • Infrastructure financing: $20 billion
  • Other infrastructure: $266 billion
  • Water: $55 billion
  • Broadband: $65 billion
  • Environmental remediation: $21 billion
  • Power, including grid authority: $73 billion
  • Western water storage: $5 billion
  • Resilience: $47 billion

Next Steps
It is important to note that the bill still needs to be passed by the Senate and the House before it goes to President Biden to be signed into law. Many changes can still be made before the bill is even voted on. Both the Senate and House could make amendments to the text. The bottom line is that the legislation could be different than what it is today.

Sources: Roll Call, Fox Business, CNN
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. Rich Higgins, CPA, managing principal – New Jersey office can be contacted at Richard.Higgins@McCarthy.CPA. I can be reached at Marty.McCarthy@McCarthy.CPA. As always, we are happy to help.

Stay safe,

Marty McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company

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