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Posted by Tasnim Ahmed
May 11, 2021
President Joe Biden described the aim of his $2.3 trillion American Jobs Plan, unveiled March 31 at the Carpenters Pittsburgh Training Center in Pennsylvania, as “building America’s backbone” while also creating good jobs. To be paid for over eight years, primarily through corporate taxes over a 15-year period, the proposal targets spending on overhauling and modernizing the country’s infrastructure. While Democrats hope to pass the AJP by July, there are likely to be many changes before it becomes law.
According to an April 2021 report from Moody’s Analytics, the country’s infrastructure investment has steadily declined as a share of the national GDP since the 1950s and 1960s, when it hovered around 6%. Infrastructure investment today as a share of GDP is currently well below 2% of GDP, its lowest level since World War II, per Moody’s. Consequently, much of the national infrastructure has been steadily aging, with the average highway nearly 30 years old and many of the nation’s dams even older. Since maintenance has been deferred in many cases, the urgency of additional spending for replacement rather than repair has intensified, which could augur a better reception in Congress for the plan.
The plan’s definition of infrastructure is expansive, encompassing funding for the repair of roads, bridges, ports and airports; affordable housing; the expansion of clean energy initiatives; the deployment of broadband service; supply chain improvements; strengthening of electric grids and essential services, along with a slew of other initiatives.
The plan envisions a national network of small business incubators and innovation hubs to be developed with $31B in funding. The money would come in the form of programs that give small businesses access to credit, venture capital and R&D dollars. Additionally, funding is allocated for community-based small business incubators and innovation hubs to support the growth of entrepreneurship in underserved communities.
Many VCs are of the opinion that even though semiconductors and hardware for broadband services fall outside their traditional sphere, spending in this arena will have a positive impact. Startups are expected to begin building off the planned broadband and 5G capabilities that impetus would deliver, for example.
Meanwhile, chip manufacturing and hardware applications that are usually high in capital requirements would be able to build on capabilities already present. Once greater broadband access becomes a reality, an ecosystem of connected communities that were previously subserviced will open up new avenues. This will bring large parts of the country into the mainstream fold.
In addition, myriad industries with a sizeable number of startups and VCs attached would also be impacted by the plan. For example, electric vehicles and their corresponding infrastructure are slotted for a $174 billion allocation. Renewable energy sources and R&D into clean energy are slated to receive $180 billion.
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