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US Congress Passes Infrastructure Bill: Over $1trn for Roads, Railways, Clean Energy, Broadband and More

Nov 9, 2021 11:53 AM 5 min read

On Friday, the US Congress passed a bill that entails the largest infrastructural overhaul of the American economy in over a decade.

The Infrastructure Investment and Jobs Act (IIJA) passed the House of Representatives through a late-night 228-to-206 vote that followed weeks of frantic negotiations and frenetic u-turns. 13 Republicans crossed party lines to vote for the measure - even as six Democrats held out - in a limited but rare display of bipartisanship. The legislation was earlier passed by the Senate 69-30 in August.

The framework for the IIJA was announced in June by President Joe Biden. It includes funding for key aspects of the White House's infrastructure plans. The 2,702-page bill now awaits Presidential assent.


The IIJA is part of Biden’s larger economic agenda aka the Build Back Better Plan. It includes trillions of dollars in proposed spending on climate action, clean energy, electric vehicles, family aid, higher education, housing, cybersecurity, broadband access etc.

US Congress Passes Infrastructure Bill: Over $1trn for Roads, Railways, Clean Energy, Broadband and MoreThe Build Back Better Plan is three-pronged, with the first part being a pandemic relief package that was enacted in March. The other two parts deal with actual infra spending but they have been mired in controversies and perennially delayed.

First is the American Jobs Plan (AJP), which deals with the more "traditional" definition of infrastructure, focusing on bridges, highways and transportation. The second is the American Families Plan (AFP), which concerns "human infrastructure", with provisions on social spending, childcare, healthcare, education etc.

Both these plans have been embroiled in bitter debates over the price tag and provisions. The Republicans have naturally been opposed to any legislation from the beginning, but there have been divisions within Democrats as well. Centrist legislators have reservations about the size of the bills while progressive Democrats protest that the plans don’t do enough.

As such, the original provisions have been watered down over recent months. Much of the AJP was added to the now-passed IIJA. Meanwhile, the social components of the Build Back Better Plan have been incorporated into the Build Back Better Act (BBBA), which remains on shaky ground.

Progressives contend that the Build Back Better Act in its current form - already whittled down to $1.75trn from $3.5trn - is both insufficient and under threat from centrist hold-outs. As such, they threatened to foil the passage of the IIJA, hoping to use that as leverage to secure the passing of the BBBA.

On Friday, moderate Democrats gave their progressive peers a written assurance that they would back the BBBA - provided the Congressional Budget Office’s (CBO’s) estimates for the price tag of the bill tallies with the White House’s. Subsequently, most progressive rebels came back in the fold and the IIJA saw the light of day.

Biden has hailed the bill’s passing as a “monumental step forward” and argued that “generations from now, people will look back and know this is when America won the economic competition for the 21st century”.


So, What’s in the IIJA?

The legislation includes $1.2trn in expenditure - of which $550bn is new spending - over 10 years in an array of infrastructure projects. Much of this includes allocations for roads, bridges, public transport and waterways. It also includes the US’s largest investment in preparation of the climate crisis - $50bn to help communities affected by fires, floods, storms and droughts. $21bn will also be used to clean up contaminated “superfund” and brownfield sites, abandoned mines, and old oil and gas wells.

$65bn has been earmarked to plug the country’s digital divide, shore up broadband services, and reduce the price of internet services for low-income households. The IIJA would also advance US EV infrastructure, by providing $7.5bn for zero- and low-emission buses and ferries and another $7.5bn towards building charging stations.

Of course, all these figures are significantly lower than the ones initially proposed, thanks to the prolonged and acrimonious compromise process.


Footing the Bill

Democrats have claimed the bill largely pays for itself. For the first five years, the package is expected to be paid for by tapping into unspent COVID-19 aid relief and unused unemployment insurance aid, as well as by restarting a tax on chemical manufacturers, selling oil from the Strategic Petroleum Reserve, raising capital via 5G spectrum auctions, strengthening tax enforcement when it comes to cryptocurrencies, and relying on projected economic growth from these investments.

However, the CBO estimated that these provisions may not shell out as much money as expected. It projects the IIJA could add $350bn to the US government deficit.


All Eyes on the BBBA

The White House claims that the IIJA will add, on average, about 2 million jobs per year over the coming decade. And while its passage hands Democrats a win and paves the way for an overhaul of the US transportation sector - a cause championed by both parties - the more consequential climate and social agenda awaits in the BBBA.

Republican opposition to the measure meant the bill will be deliberated on as a reconciliation bill i.e. A special parliamentary procedure aimed at expediting the passage of budgetary legislation without a supermajority and with a simple majority. However, push-and-pull tactics by Democratic progressives and centrists mean that the legislation’s future is tenuous at best.

The BBBA’s passage depends on the CBO analysis of the same, which is expected next week. Centrist Democrats say if these numbers tally with the White House’s estimates, they will vote for the package. And with a slim majority in the House, the Democrats need every vote they can get. Moreover, passage in the House would be followed by Senate debates. If the latter decides to rework the bill, another House passage would be required.

The most divisive issue that makes intra-party unity elusive remains the question of how and who will pay for the bill. Earlier ideas pertaining to corporate tax hikes and an increase of the individual tax rate on the wealthiest Americans faced stiff opposition by centrists and were shoved off the table. As was the Billionaire Income Tax.

At least for now.



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