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- President Biden and a bipartisan group of Senators reach a deal on a $1tn infrastructure plan
- Investors cheer the agreement on the new spending, the S&P500 & the Nasdaq close at records
US President Joe Biden and a group of bipartisan Senators agreed on an infrastructure deal that will overhaul the nation’s transportation system, fix roads and bridges and improve water-related services, among other priorities. The long-awaited agreement arrived just before the Congress entered into the two-week July 4 recess.
Thursday marked the historical achievement as the day on which President Joe Biden and a group of 10 centrist Senators secured roughly $973bn that would be spent on infrastructure projects over a period of five years. Furthermore, the agreement states that if the spending period gets extended to eight years, the amount of funding would increase to $1.2tn.
President Biden hailed the historical milestone and praised the joint effort by five Democrats and five Republicans who have “come together and forged an infrastructure agreement that will create millions of American jobs”.
The bipartisan deal was a result of months of negotiations between Democrats and Republicans. The initial proposal of President Biden aimed to pass a $2.3tn spending bill that did not meet the support of Republicans. There are still challenges ahead for the current agreement of roughly $1tn as it is tied to the passage of more elements of Mr. Biden’s $4tn economic agenda.
“What we agreed on today is what we could agree on. The physical infrastructure. There’s no agreement on the rest,” the President said, while also mentioning he would not sign the legislation until a bill containing the broad agenda is on his desk. “If this is the only one that comes to me, I’m not signing it.”
Compromises Give Way to Agreement
The spending, if signed into law, would include $109bn on roads and bridges, $66bn for rail networks, and $49bn for public transit. Other measures include airports, broadband networks, and electric vehicle charging stations.
The two sides have reached an agreement on the most significant sticking point, how to pay for the big-ticket spending. In the end, the negotiators struck a deal to cover the cost of the plan by repurposing existing federal funds, alongside revenue collected from enhanced enforcement at the Internal Revenue Service. Lawmakers also expect to raise about $100bn through public-private partnerships.
“We made serious compromises on both ends,” President Biden said, adding it reminded him “of the days we used to get an awful lot done in Congress”. “Neither side got everything they wanted in this deal, and that’s what it means to compromise. And it reflects something important: It reflects consensus,” the President said during his speech at the White House.
Democrats now hope to use their slim majorities in Congress to approve the rest of the economic agenda, which would be pursued separately from the bipartisan agreement achieved yesterday.
The stock market cheered the agreement on the new spending as the Dow Jones Industrial Average jumped over 300 points, while the S&P500 and the Nasdaq Composite closed at new records. The blue-chip 30-stock index gained 1%, while the S&P500 and the Nasdaq were up 0.6% and 0.7% respectively.
Painting an even rosier picture, the Labor Department reported Thursday that initial unemployment claims continued to fall last week to a seasonally adjusted 411,000, down from 418,000 in the prior week.
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