Infrastructure Bill Looks Doomed as Time Runs Out, Height Says
(Bloomberg) -- Opposition from the White House and a surge of Covid-19 cases in primarily Republican states could create insurmountable odds for a $1.5 trillion infrastructure package from House Democrats, Height Securities said in a research report.
Failing to pass the bill would prove disappointing for industrial and construction companies, the likely beneficiaries of such a package.
The Trump administration in a statement Monday described the House infrastructure bill as “problematic” and threatened to veto it. That illustrated the “significant gap” between the two parties when it comes to infrastructure spending, Height analysts Benjamin Salisbury and Hunter Hammond wrote.
An infrastructure bill “is a prime candidate for stimulating economic recovery only once the country has moved beyond the crisis mitigation phase,” Height wrote. Until then, direct payments are the fastest way for policymakers to respond, it said.
The resurgence of the virus in Republican-leaning Sun Belt states such as Texas, Florida and Arizona threatens any effort to move past the current crisis, and means vanishing odds that infrastructure spending will find its way into a Phase 4 stimulus bill, the analysts said.
“This leaves precious little time for the heavy lift of negotiating compromise between Republican and Democrats' disparate approaches on infrastructure before the November elections take hold of policymaker's focus,” Salisbury and Hammond wrote.
Companies including Caterpillar Inc. and U.S. Steel Corp. saw shares climb on June 16 after Bloomberg reported President Donald Trump was looking to deliver on a campaign promise with a nearly $1 trillion infrastructure proposal. Catepillar has since fallen 3.8% while U.S. Steel has shed 31%.
©2020 Bloomberg L.P.
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