Infrastructure Investment May Help Rural Areas, Boost GDP

DENVER, CO – The $1.9 trillion American Rescue Plan Act passed by Congress in March was designed to provide near-term help to those hurt by the pandemic while the newly announced $2.3 trillion American Jobs Plan is an infrastructure package intended to shape the economy for the long run. According to Dan Kowalski Vice President, Knowledge Exchange Division with CoBank both political parties agree that serious investment in infrastructure is long overdue, and given the current majorities in Congress, and the opportunity to use the budget reconciliation process again this year, Kowalski says much of this plan will be translated into a bill that will pass in the summer or fall of 2021. For perspective, government infrastructure spending peaked in the 1950s and 1960s at roughly 6 percent of gross domestic product (or GDP), fell dramatically in the 1970s and again in the post-Great Financial Crisis (GFC) years of the 2010s. Today, current infrastructure investment is under 2 percent of GDP, the lowest level on record going since the 1940s. Many have called this post-GFC period a lost decade, noting that if we had kept the pace of pre-GFC spending, we would have invested another $1.5 trillion in infrastructure between 2009 and 2019. Infrastructure spending has a very large multiplier effect on the economy with about $1.50 generated from every dollar invested. Moody’s stipulates that infrastructure projects would not get off the ground until late in 2022, and higher corporate taxes, if passed, would more than offset the economic gains next year.

The infrastructure package as detailed by the White House would have far-reaching impacts on rural industries:
• $620 billion for traditional infrastructure to repair 20,000 miles of roads and 10,000 bridges, with $17 billion for ports and waterways.
• $111 billion for water infrastructure, in part to replace all lead pipes to 9 million U.S. homes.
• $100 billion for rural broadband to connect 30 million homes lacking adequate coverage, and achieve universal, affordable broadband by 2030.
• $174 billion related to electric vehicles to build 500,000 new charging stations and provide tax credits and subsidies for manufacturers and consumers.
• $100 billion to improve the electrical grid, including incentives to construct high-voltage lines that support more renewable transmission.

(SOURCE: All Ag News)