Are Congressional Republicans Getting Cold Feet on Infrastructure?
Author: Greg Valliere
July 19, 2021
CHUCK SCHUMER’S AMBITIOUS GOAL for Senate consideration of an infrastructure package will collide with two huge obstacles this week — the bill hasn’t been written yet, and there’s no agreement on how to pay for it.
SCHUMER IS INSISTING ON A PROCEDURAL VOTE this Wednesday to begin consideration of a $1.2 trillion infrastructure package that would fund spending on highways, bridges, clean water, broadband, etc. This still has a chance of passage before the early August recess.
BUT WILL TEN REPUBLICANS SUPPORT IT? That’s the goal; Schumer wants all 50 Democrats plus 10 Republicans to pass a filibuster-proof bill. But Republicans have balked on spending billions more on the Internal Revenue Service, which theoretically would raise $100 by curbing tax avoidance. That provision apparently has been booted, which means there’s a $100 billion revenue gap.
COMING UP WITH A FINAL BILL by Wednesday thus appears to be unlikely, since those Republicans willing to deal aren’t going to support a measure that hasn’t been written yet. And GOP lawmakers have no interest in supporting a second infrastructure bill costing about $2 trillion, with huge money for education, health care, tuition relief, Green projects, etc.
THERE’S ONE OTHER WILD CARD: The Congressional Budget Office, the official arbiter of what can be included in these bills, may rule that revenue assumptions are too generous, or that provisions like immigration reform are not germane in an infrastructure bill.
WHY THIS IS IMPORTANT FOR THE MARKETS: There’s a growing sense that the U.S. economy will slide from robust growth in May to simply good growth in November. So more stimulus may be needed; where will that come from? A child tax credit and a generous Social Security cost of living increase by year-end will help, as will the likelihood that gasoline will follow oil prices downward.
BUT AN INFRASTRUCTURE BILL WOULD HELP STIMULATE THE ECONOMY amid a suddenly gloomy mood over a stunning resurgence of Covid cases, urban gun violence and environmental disasters from California to Germany.
BUT REPUBLICANS MAY NOT BE READY to pass the first infrastructure bill this week, and they will adamantly oppose a second measure — still another headache for Joe Biden.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2021 AGF Management Limited. All rights reserved.