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While Democrats and Republicans are pushing different infrastructure bills this week, Washington could end up delivering a modest bipartisan measure by late September, according to one analyst.
House Democrats led by Rep. Peter DeFazio of Oregon, chairman of the chamber’s transportation committee, rolled out a $494 billion INVEST in America Act on Wednesday, but Republican Sen. John Barrasso of Wyoming, head of the Senate’s panel on public works, has criticized their past efforts as “a laundry list of liberal priorities” and said at a hearing on Thursday that his $287 billion America’s Transportation Infrastructure Act is “the right medicine for our roads and our economy.”
“For investors, this partisanship and lack of agreement on the highway bill could presage a small-scale infrastructure and transportation-focused stimulus package in 4Q 2020, somewhere in the range of $50-$100B,” said Henrietta Treyz, director of economic policy at Veda Partners, in a note on Thursday.
The current surface transportation bill expires on Sept. 30 so there is a “must pass” element to this issue, Treyz said. But that also has contributed to “a lot of the urgency” fading away for an infrastructure component in the next big coronavirus relief package, she added.
The Democrat-run House and presumptive Democratic presidential nominee Joe Biden as well as with President Donald Trump and some allies in the Republican-run Senate have talked up the need for new investments in roads and bridges as Washington considers another round of aid to cushion the blow of the coronavirus crisis.
“It’s clear that Democrats, President Trump and Vice President Biden believe spending in the ~$2T range is the answer to an otherwise painful economic recovery from here, but Republican objection makes that a non-starter in this Congress,” Treyz said. So what could be produced by late September is a stimulus package with a price tag of about $100 billion that’s “targeted at infrastructure, transportation and employee salaries,” according to the Veda Partners analyst.
Other analysts expect just a short-term reauthorization of the current surface transportation bill by late September, with no new funding possible until after the November elections.
Infrastructure stocks, as tracked by the iShares Global Infrastructure ETF IGF, -1.45% , are down by 14% this year, while the broad S&P 500 index SPX, -0.56% has lost 4%.
