What Is the Infrastructure Investment and Jobs Act?
The $1.2 trillion Infrastructure Investment and Jobs Act, adopted by the U.S. Congress in November 2021, provided $550 billion for new initiatives to rebuild roads and bridges, improve public transit, replace lead pipes and address drinking water contamination, expand access to high-speed internet, and more. Renewed appropriations for routine federal infrastructure spending accounted for the balance of the cost.
The legislation was the result of a bipartisan compromise in the U.S. Senate scaling back as much as $1.7 trillion in new spending on infrastructure sought by President Joe Biden in his American Jobs Plan.
The Senate passed the Infrastructure Investment and Jobs Act on Aug. 10, 2021, by a vote of 69-30, and the U.S. House of Representatives approved it on Nov. 5 by 228-206, with 13 Republicans voting in favor alongside all but six Democrats. Biden signed the bill into law on Nov. 15, 2021.
- The Infrastructure Investment and Jobs Act allocated $550 billion for new initiatives repairing and upgrading U.S. infrastructure.
- A scaled down version of the infrastructure spending President Joe Biden sought, it came into force in November 2021.
- In addition to road, bridge, and port repairs and public transit investments, the Infrastructure Investment and Jobs Act provides funds for clean water, expanded access to high-speed internet, cybersecurity, and infrastructure protection from weather disasters.
- The Build Back Better Act, related economic legislation proposed by Biden to improve the U.S. social safety net, failed to secure necessary support and was replaced by the Inflation Reduction Act of 2022 providing tax credits for clean energy and extending federal health insurance subsidies.
Understanding the Infrastructure Investment and Jobs Act
Biden pledged aggressive infrastructure investment during his presidential campaign and made it a policy priority after taking office. Chronic underinvestment has turned crumbling U.S. infrastructure into a public safety problem as well as an economic liability, and fixing this would create millions of jobs while promoting growth and U.S. competitiveness, he has argued.
The Infrastructure Investment and Jobs Act provides $550 billion in funding for new initiatives to repair roads and bridges, improve public transit, and deliver clean drinking water and high-speed internet, among other provisions. It also reauthorizes federal spending on long-standing infrastructure programs funding highway maintenance, electrical grid upgrades and water reclamation projects, among others, through 2026.
The new initiatives include:
- $110 billion to repair and rebuild roads and bridges
- $66 billion to upgrade and maintain passenger and freight rail systems
- $65 billion to update power lines, prevent hacking of the power grid, and provide clean energy
- $65 billion to expand broadband in rural areas and low-income communities
- $55 billion for clean drinking water, including lead pipe replacement and addressing contamination with lead and other chemicals
- $50 billion to protect infrastructure from cybersecurity attacks and weather disasters
- $39 billion to upgrade public transit, create new bus routes, and increase accessibility for seniors and the disabled
- $25 billion for upgrades and expansions of U.S. airports, control towers, and control systems
- $21 billion to clean up Superfund and brownfield sites, abandoned mines, and old oil and gas wells
- $17 billion for port infrastructure and truck emissions at ports
- $11 billion to address highway, pedestrian, pipeline, and other safety areas
- $8 billion for Western water infrastructure, including mitigating drought conditions
- $7.5 billion for a nationwide network of electric vehicle charging stations
- $5 billion for electric school buses, primarily in low-income, rural, and tribal communities
Cost of the Infrastructure Investment and Jobs Act
The Congressional Budget Office has estimated the Infrastructure Investment and Jobs Act will cost $256 billion over 10 years.
According to the Biden administration, the cost will be offset by redirecting unspent emergency relief funds, targeted user fees, stepped up tax enforcement for cryptocurrencies, spectrum auction proceeds, and the higher economic growth fostered by the new investments.
In its original form as the American Jobs Plan, the Infrastructure Investment and Jobs Act was one of three major fiscal initiatives proposed by Biden under his Build Back Better agenda. The other two were the American Rescue Plan, a $1.9 trillion pandemic relief and economic stimulus legislation enacted by Congress in March 2021, and the American Families Plan, an ambitious proposal to upgrade the U.S. social safety net.
The Build Back Better Act based on the American Families proposal stalled in Congress in 2021 as Biden failed to convince West Virginia Democrat Joe Manchin III to support the bill in the Senate. Manchin, whose vote was essential to Democrats for passing legislation without Republican support, objected to the bill's cost and its expansion of the child tax credit in particular.
In July 2022, Manchin announced he would support the Inflation Reduction Act of 2022, which like the Build Back Better Act would extend federal health insurance subsidies provided by the American Rescue Act through 2025.
The estimated cost of $64 billion for extending the health insurance subsidies would be more than fully offset by the projected long-term savings of $288 billion from a provision letting Medicare negotiate drug costs with pharmaceutical companies. The Inflation Reduction Act would also allocate $369 billion to projects supporting U.S. energy security and curbing climate change. The bill would raise an estimated $313 billion over 10 years by instituting a 15% minimum corporate income tax and $124 billion from stepped up tax enforcement by the Internal Revenue Service (IRS).
The Congressional Budget Office has estimated the legislation will curb deficit spending by $294 billion over 10 years, including a projected $204 billion in extra revenue from increased funding of the IRS.
Senator Kyrsten Sinema, a Democrat from Arizona, agreed to support the measure after a tax change detrimental to private equity and hedge fund managers was removed, preserving the carried-interest loophole. The bill included a 1% tax on corporate share buybacks in its place. Sinema also secured additional drought funding in the legislation.
The Senate approved the Inflation Reduction Act on Aug. 7, 2022, by a 51-50 vote along party lines, with Vice President Kamala Harris casting the tiebreaker. The bills was passed by the House on Aug. 12, and signed into law by President Biden on Aug. 16.
What’s the Difference Between the Infrastructure Investment and Jobs Act and the Build Back Better Act?
The Infrastructure Investment and Jobs Act, enacted in November 2021, included $550 billion for new initiatives upgrading and repairing U.S. infrastructure including roads, bridges, railroads, public transit, ports, and airports. The 2021 Build Back Better Act aimed to upgrade the U.S. social safety net with childcare, housing, nutrition, and health care measures costing a projected $1.75 trillion over 10 years and increasing the deficit by $158 billion over the same span after offsets. The Build Back Better Act never came up for a vote in the Senate, where it lacked majority support. In its place, the Senate approved the more narrowly focused Inflation Reduction Act of 2022 in August.
What Is an Offset in Legislation?
An offset is a legislative provision offsetting the additional U.S. government spending required by the legislation. For example, congressional budget rules require legislative amendments proposing extra spending to be entirely offset by provisions increasing government revenue, redirecting previously appropriated funds, or by other means.
What Energy Provisions Did the Inflation Reduction Act of 2022 Include?
The Inflation Reduction Act of 2022 allocated $369 billion for energy security and climate change initiatives expected to help cut greenhouse gas emissions by 40% between 2005 and 2030. It included consumer tax credits for electric vehicles, rooftop solar power, and home energy efficiency projects; investment and production tax credits to on-shore clean energy equipment manufacturing; and tax credits and grants to reduce greenhouse gas and pollution emissions.