The 2020 US election: an infrastructure perspective
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Both Republicans and Democrats recognise the need for and the stimulative benefit of infrastructure investment, particularly when fiscal spending is needed during recession. However, even before COVID-19, there was an urgent need for spending on American infrastructure.

As an example, in 2017 the American Society of Civil Engineers estimated that there is a US$2 trillion funding gap over 10-years for infrastructure in the US. COVID-19 may well be the catalyst for the winner to spend more on infrastructure, and to implement more collaborative policies with states, municipalities and private companies to mobilise more investment.

To date, both candidates are pledging pro-infrastructure spending policies. So far, Trump has committed to $1 trillion of investment over ten years on highways and transit, rural broadband, 5G and other non-transportation infrastructure. By contrast, Biden is focusing on $2 trillion of investment in sustainable infrastructure and clean energy, 5G and rural broadband.

Whoever wins the White House, the desperate need for more infrastructure spending and more economic stimulus could prompt clearer and more aggressive policy promises from both sides. This time might be different in this regard.

Issues for each candidate

A Trump win

If Trump is re-elected, we expect taxes to remain low and the roll-back of more regulation. Trump appears to favour supporting the established fossil fuel industries over renewable energy, or what we call 'future energy' opportunities such as wind, solar, batteries and hydrogen. This could be positive for energy infrastructure such as pipelines, though the ability for new pipelines to be built has already been seriously stalled by environmental activism over recent years. Any lack of proactive policies in the renewable space that could expand the investment opportunity-set in infrastructure could be a missed opportunity during a second Trump term.

Whatever the case, 2019 was a record year for renewable energy investment in the US. Whilst Trump himself has made negative remarks on renewable energy, his administration has been more progressive in allowing the development of renewable energy projects on public land than previous administrations.

A Biden win

As a seasoned legislator, Biden has an extensive track record in government, so similarly to Trump, he is a known quantity for investors, which already helps reduce a significant amount of risk. Given Biden's strength in the polls, the market is currently pricing the possibility of a Biden victory. When Biden was VP under Obama, during the challenges and recovery from the Global Financial Crisis, he gained directly relevant experience to where we are now with the current pandemic recession.

Considering Trump's response to date on COVID-19, a change of government could be well-received by markets hoping for a more focused effort to eradicate the risks. However, there is a fine line between how both candidates are viewed on this as Trump errs on maintaining a functioning economy even with the high risk of growing infection rates, while the market might perceive Biden as a risk in being more partial to lockdowns and controls to help stem the virus - the risk/reward trade-off on this is difficult for market analysts to calculate

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