Goldman has the details:
1. The White House proposes to spend roughly $2.2 trillion over ten years. The Administration expects most of this spending to be complete after 8 years. This appears to be mostly new money with less double-counting of existing spending than in last year’s $1.5 trillion House bill. Of the $2 trillion, around $558bn appears to go to traditional heavy infrastructure projects like highways, transit, water, and sewer. Another $374bn would go to high-tech areas, such as broadband, grid modernization and clean energy and storage, and electric vehicle-related spending.$378bn would go to the building and upgrade of residential and non-residential structures. R&D and manufacturing incentives would total $480bn. $500bn would be dedicated to caregiving and workforce development. These numbers all look generally similar to the Biden campaign proposals.
2. The spending from this plan would likely take a few years to ramp up. We have noted before that increases in traditional infrastructure funding often take a few years to reach the higher run rate, with a rule of thumb being that an increase in federal funding of $1 in one year increases federal spending by only about $0.40 the following year. That said, some of the spending could happen more quickly. For example, tax incentives to the private sector to install recharging stations for electric vehicles might spur investment more quickly, as might some of the federal procurement programs. Taking the White House description at face value, the plan would average around $275bn (1.25% of GDP) over the next 8 years. Using the rule of thumb just noted, this would suggest that it could boost federal spending by a little over $100bn (0.5% of GDP) next year, and perhaps $150-200bn (0.7%) in 2023. This is similar to the additional infrastructure spending we assume in our economic forecast.
