The Coming Infrastructure Reset: Politics, Economics, & the Next "Big Bill"
- Ed Sullivan
- Dec 14, 2025
- 7 min read
Updated: Jan 7
Market Update: Breaking News
Introduction
The Infrastructure Investment and Jobs Act of 2021 (IIJA) is scheduled for replacement in mid-2026. IIJA was a five-year, $1.2 trillion dollar program, of which $550 billion was new spending that supported highways, bridges, water systems, ports, transit, and grid projects. By this program supporting spending in concrete-intensive sectors, it was a core component for public construction activity, which accounts for more than 30% of total cement consumption.
When IIJA was initially passed, considerable optimism surrounded the program. Indeed, during congressional hearings I testified on the importance of the bill, as well as the ability of the industry to provide necessary product. Congressional concern over cement capacity constraints indicates the optimism that surrounded the new program. There is little doubt the program was ambitious, but its strength in delivering the anticipated volume of cement and concrete demand eroded under the weight of inflation.
The replacement of IIJA plays a critical role regarding the volume outlook for concrete related industries post 2026. The new multiyear program will impact concrete demand, utilization rates, pricing power, and the stability of shipments across nearly every major regional market. The level of investment in infrastructure going forward will also impact economic growth, structural inflation, our competitiveness as a nation, the quality of life and job creation.
The Economic & Political Context Shaping the Next IIJA
The next Infrastructure Investment and Jobs Act will be crafted in a fundamentally different macroeconomic and political environment than the 2021 legislation. The original IIJA was enacted during a period of near-zero interest rates, elevated deficit tolerance, and broad political urgency to support post-pandemic economic recovery.
That environment has since shifted. Higher interest rates have raised the cost of federal borrowing, while rapidly rising debt service has made large, deficit-funded spending programs far more difficult to justify politically. Inflation sensitivity has also increased voter resistance to large federal outlays that could be perceived as simultaneously adding to the federal debt and overall price pressures.
In addition, long-standing structural issues in infrastructure finance have become more visible. The Highway Trust Fund remains under severe strain as fuel tax receipts fail to keep pace with spending needs and electric vehicle adoption accelerates. This has weakened confidence in long-term highway funding formulas without permanent general-fund support.
Politically, polarization has deepened and the bipartisan coalition that enabled passage of the 2021 IIJA has narrowed. Today, persistent political division in Congress makes reaching consensus on an IIJA replacement difficult. While both parties’ support infrastructure in principle, disagreement over spending levels, climate provisions, and deficit impacts sharply limits the likelihood of a broad, bipartisan bill.
Against this backdrop, the next IIJA is likely to emerge as a narrower, more targeted package. Rather than a broad national uplift across all infrastructure categories, it will likely reflect tighter fiscal discipline, heightened national security concerns, and intensified competition for federal capital between transportation, energy, defense, and industrial policy priorities.
Range of Policy Outcomes for the Next IIJA
There are a multitude of policy outcomes regarding the replacement of IIJA. Considering the economic and political forces, the next Infrastructure Investment and Jobs Act is likely to emerge under one of four broad legislative outcomes. These scenarios include:
Full Robust Replacement
Mid-Scale Industrial Focus
Patchwork Reauthorization
Fiscal Retrenchment
These scenarios reflect varying degrees of fiscal capacity, political alignment, and national urgency.
Full-Scale Replacement: This is the high-end solution and resembles the original IIJA in both size and breadth - delivering a broad national uplift across highways, bridges, water, transit, ports, energy, and grid systems. Given the broadscale spending and considering heavy construction inflation, this version of IIJA replacement would cost as high as $2.0 trillion over five years.
Mid-Scale Industrial Framework: This solution is much less comprehensive than the Full Scale Replacement scenario. It focuses investment on freight corridors, ports, grid reliability, energy systems, and defense-adjacent infrastructure. It also reflects tighter deficit tolerance but sustained bipartisan support for industrial resilience and supply-chain security.
This version of IIJA replacement cuts out many environmental and nonessential spending efforts. By reducing or eliminating spending on lesser important programs, and compensating for inflation erosion, this version would cost as much as $1.2 trillion.
Patchwork Reauthorization: This solution is where Congress relies on short-term extensions and selective program funding rather than a comprehensive long-duration bill. This requires congress to act multiple times over the five-year period.
For state DOTs, contractors, and cement and concrete producers, patchwork reauthorization is the worst-case scenario for planning certainty, even though it is not the lowest-spending scenario in real terms. This version of IIJA replacement would cost as much as $500 billion.
Fiscal Retrenchment: This solution is the least likely scenario and reflects aggressive deficit control that leads to real declines in federal infrastructure spending after the current IIJA outlays taper. Only the highest priority projects are funded. This leads to insufficient investment and pushes more maintenance and expansion onto the state governments. This version of IIJA replacement would cost as much as $400 billion. Compared to the Patchwork reauthorization, it provides less dollars but adds more certainty to planning.
The Likely Policy Outcome and Why
The most likely outcome for the IIJA replacement reflects key assessments regarding fiscal reality, political structure, and historical precedent. Our recent Fall/Winter 2025 Cement Forecast assumes the Mid-Scale Industrial Framework.
We believe it is the most likely because it aligns closest to today’s governing constraints. Federal deficit tolerance has fallen sharply since 2021 as interest rates and debt service costs have risen. At the same time, bipartisan support has consolidated around supply-chain security, energy reliability, grid hardening, ports, and defense-adjacent infrastructure. These priorities can justify substantial capital spending without reopening the divisive climate, transit, and social-infrastructure debates that dominated the last IIJA.
The 2026 midterm elections significantly increase the likelihood of a Patchwork Reauthorization outcome. Election-year paralysis, uncertain future majorities, and heightened fiscal politics make repeated short-term extensions far more probable than a full five-year surface transportation bill. This outcome significantly reduces spending during the five-year period, disrupts planning, and shifts a considerable amount of the financial burden to the states. In addition, this version may place more expose the frailties of the Highway Trust Fund since every extension of a highway spending will probably require Congress to patch the trust fund.
Because many consider public infrastructure spending as a cost and additive to the federal deficit, rather than an investment yielding economic returns, the Full Robust Replacement scenario is unlikely given growing concerns about the federal debt. Historically, trillion-dollar infrastructure bills only pass in environments defined by recession, crisis, or broad national-security urgency. Absent such a trigger, Congress is unlikely to support another program at IIJA’s original scale in real, inflation-adjusted terms.
Finally, fiscal retrenchment remains a risk tied to federal debt levels and the potential of bond market stress or forced austerity. It is unlikely, but its consequences would be severe enough to warrant inclusion as a downside stress case.
The Time Lag Between a New Infrastructure Bill and Concrete Consumption
Even after a new federal infrastructure bill is enacted, its impact on concrete consumption is not immediate. The translation of legislative funding into actual concrete placement follows a multi-stage process that introduces a predictable delay between authorization and concrete demand.
After passage, federal agencies must first issue apportionments, define program rules, and publish grant guidance. States and utilities then advance project design, secure local matching funds, and resolve right-of-way and utility conflicts. The longest delay typically occurs during permitting and environmental review, where projects may spend months or years awaiting clearance before entering active construction.
For light pavement rehabilitation and resurfacing, concrete demand can begin to appear within six to twelve months of enactment. For structurally intensive projects - bridges, interchanges, water and wastewater facilities, ports, transmission, and energy infrastructure - the first major concrete placements typically occur eighteen to thirty-six months after the bill becomes law. Large megaprojects often extend that timeline further.
These timelines may be reduced. The Trump administration could meaningfully accelerate a new IIJA’s impact on concrete demand through executive and regulatory actions alone, pulling forward material consumption. Lacking the administration’s action, the SPEED Act now before the House could accelerate the impact of the next IIJA by pulling the first major wave of concrete demand forward by months.
Neither of these programs increase total demand, but they could fundamentally change when that demand hits the system. If meaningful permitting reform accompanies the next infrastructure package, these timelines could compress by as much as one-third, pulling demand forward considerably. However, absent such reform, producers should plan for a delayed but durable demand response. For cement and ready-mix suppliers, this lag is critical to capital planning, import risk management, and pricing strategy.
Baseline IIJA Impacts on Cement Consumption
Under the most likely Mid-Scale Industrial replacement scenario, which we define as the baseline, the next IIJA would initially contribute to moderate growth in U.S. cement consumption. This scenario focuses on freight corridors, ports, grid reliability, energy systems, and defense-adjacent infrastructure. While the real dollar spending is less, it eliminates many environmental and nonessential spending efforts. The remaining spending programs typically carry high cement and concrete intensities. This means for every dollar spent, more cement is consumed compared to the existing IIJA.
No funding scenario outlined thus far includes any form of indexing to construction inflation. In today’s environment, inclusion of indexing could be interpreted as adding to inflation woes that currently embrace the economy. Without indexing, the stimulatory impact of a new IIJA on cement consumption will fade over time.
Construction inflation will erode the real value of federal funds, causing fewer concrete-intensive projects to be initiated in the later years of the program. The result is strong early demand and weakening real growth by years four and five.
Compared to no replacement of IIJA, the Mid-Scale Industrial scenario adds roughly 3 million metric tons (MMT) of cement consumption annually. The Full Robust Replacement adds roughly (8) MMT annually. The Patchwork Reauthorization adds (1) MMT annually, and the Fiscal Retrenchment reduces cement consumption by as much as (3 ) MMT annually. Combined, these scenarios define the full, policy-driven risk and opportunity range facing U.S. cement producers over the next several years.
About The Sullivan Report
The Sullivan Report delivers subscription-based economic forecasts, news, and market updates tailored to the cement, concrete, construction, and building materials industries. Its flagship publication, the Cement & Construction Outlook, is released three times a year - and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape.
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