AGF Management : Tentative Infrastructure Deal Faces Obstacles

Insights and Market Perspectives

Author: 8

June 24, 2021

Tentative Infrastructure Deal Faces Obstacles
June 24, 2021
CAN THE CENTER HOLD? That's the key issue as centrist Senators agreed last night on an infrastructure 'framework' that now has to be sold to progressives and conservatives.

AN AGREEMENT IN PRINCIPLE is possible today before Congress leaves town for the two-week July 4 break, but as long as the package sits in the summer sun, the more it will attract opposition. It will take weeks to iron out all of the details, and then the suspense will rise - could this attract 60 votes in the Senate, avoiding a filibuster?

THE LOUDEST GRUMBLING is coming from the left, which is dissatisfied with the apparent price tag of about $1 trillion over five years and about $1.2 trillion over eight years (with $579 in new spending). That's a far cry from President Biden's initial $2.25 trillion proposal.

MOST SIGNIFICANTLY, PROGRESSIVES SUSPECT that this deal will not be followed by their two other priorities - a massive social spending package and a tax hike, advanced by a budget reconciliation tactic that would only require 50 votes, with Kamala Harris breaking a tie.

CONSERVATIVES, ON THE OTHER HAND, are suspicious that reconciliation will be used against them later this year, and they also are grumbling about the overall costs and a shaky premise - will increased funding for the IRS really generate hundreds of billions of dollars in new revenue, which would help pay for this initial infrastructure package?

WITH CONGRESS GONE FOR THE NEXT TWO WEEKS, staffers will write legislative language and and iron out details for the debate later in July. We'll put odds at no better than 60-40 that a package will be enacted just before the August break. After that, debate on more spending and tax hikes will get pushed into the fall as other issues - especially the debt ceiling - clog the legislative calendar.

WE THINK BIDEN WILL ACCEPT this framework of a deal, perhaps as early as today, even with a scaled-back dollar amount. With his job approval rating close to 60% positive in some polls, a $1 trillion infrastructure bill would be a significant victory in what has been a solid first year of Biden's presidency.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

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.

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.