Here’s how long it might take for Biden’s infrastructure package to shock the economy

After months of debate, Congress passed Historic infrastructure package late last week. Once signed into law, it will provide $550 billion in new federal investment in America’s infrastructure over five years. Funding for highways, roads, bridges, railways, the power grid, water systems, airports, broadband and public transportation will receive a major boost.
Biden states that spending will grow the economy and create jobs. While many economists agree, it may be months before Americans see the real effects — unlike the federal relief for the coronavirus pandemic that has provided Money straight into their pocket within a week.

Most of the funding will go through the US Department of Transportation and will either be awarded to the states annually based on a formula or be disbursed through a competitive grant program.

Funding for this year’s formula will come out within the next six months, and the application process for some grant programs will open during the same period, Deputy Transportation Minister Polly Tortenberg said at a press conference on Tuesday.

“The good news is that we know local transportation agencies have a lot of projects and are ready to start investing money right away, but we want to be careful in setting expectations,” Trottenberg said.

Larger projects, such as railways, will take more time and planning. The department also plans to hire more staff to help advance new scholarship programs.

But now that states and localities know the money is coming, they can start making their plans.

Over the weekend, Biden said people could start to see the effects “within the next two to three months,” noting that it would start with “telling people they’re going to work…that things are going to move.”

What gets funded first

Funds through existing formula fund programs are expected to come out faster. Much of that money will go to state transportation departments for highway maintenance and repair. States will receive nearly a third in equivalent highway funding compared to the previous year.

“We could see more contracts coming up next year before spring construction,” said Jeff Davis, senior fellow at the nonprofit Ino Center for Transportation.

Countries are also expected to receive rapid funding for transit and bridge projects. Davis said the money for airports and Amtrak may be delivered soon.

Funding for electric vehicle chargers will also be distributed through a formula, but it is a new program that the Department of Transportation will have to design first.

Grant programs will take more time

The timing is unclear for the more than $100 billion that will be allocated through competitive grant programs. The Department of Transportation will have to define the criteria, then solicit and review applications from state and local governments before the awards are announced.

“Competitive grants are likely to be the slowest to emerge,” said Susan Howard, director of the Transportation Funding Program at the American Association of Highway and Transportation Officials.

“It would be a heavy burden for the Department of Transportation to obtain this level of discretionary funding,” she added.

The Department of Transportation will set the standards for the new funding, while making sure the money goes to projects that help meet the Biden administration’s goals to combat climate change and promote equitable access to transportation.

For years, current federal grant programs for road, rail, transit, and port projects did not have enough funds to meet demand. Last year, applications were received for the Rebuilding America Infrastructure Program, better known as INFRACollectively, it requested $6.8 billion, more than seven times the funding available.

“The number of applications for these programs has been significantly exceeded. I expect that many of these applicants will amend their applications and resubmit for new funding,” said Elaine Nessl, executive director of the Alliance of American Trade Corridors and Gates.

She added that projects that may already have some initial engineering and secured environmental licenses may be among the first to use the funds.

Economic Impact

Investments are more likely to have a long-term impact on job creation than an immediate boom because the job market is already tight.

“Infrastructure spending has a greater impact on jobs when we are in a recession,” said John Huntley, chief economist at Ben Wharton’s budget model.

“The benefits of spending on infrastructure take time, but they are very long lasting,” he added.

In the long term, improved highways and bridges, as well as investment in a stronger broadband network, could make workers more efficient and ease friction points in Suppliers.
a Moody’s Analytics Report It found that infrastructure spending would create more than 800,000 jobs by the middle of the decade.
similarly, Standard & Poor’s International It found that a trillion-dollar investment in infrastructure would result in 883,600 new jobs by 2030.
Huntley indicated that he does not expect to increase the spending package inflation Because of the time it will take to release the funds.
While the legislation includes several measures to pay for expenditures — without raising taxes — it is expected to add $256 billion to the federal budget deficit over the next 10 years, according to the Congressional Budget Office.

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