Biden's $6-Trillion Budget Proposal: How It Could Impact Auto Stocks

The Biden administration will release a $6-trillion budget proposal for 2022, with official spending breakdowns set to be issued Friday, The New York Times reported. 

Breaking Down the Plan: The proposal entails increasing the federal debt to 117% the GDP, with spending reaching levels higher than anytime since World War II.

With an expected $1.3 trillion deficit annually and an eventual budget of $8.2 trillion in a decade, the proposal will need Congressional approval.

While changes rea expected prior to ratification, the plan will likely maintain its heavy emphasis on infrastructure spending.

Infrastructure Spending And The Auto Industry: The budget proposal will likely expand Biden’s previously announced infrastructure plan, which aims to revolutionize a variety of fields, including the American auto industry.

Specifically, the plan calls on positioning American auto manufacturers for success throughout the 21st century partially by expanding the electric vehicle charging network and focusing on part and material manufacturing.

Benefiting From Increased Spending: With Detroit manufacturers General Motors GM and Ford F already up around 50% and 75% in 2021, respectively, Biden’s budget proposal comes at a time of building momentum.

Ford stock has already been soaring in the last week because of its target for 40% of sales to be electric by the end of the decade.

The prospects of expanding its charging network with increased government support will only add to Ford’s EV adoption. Additionally, GM announced Thursday its plan to restart four North American manufacturing facilities following the global chip storage. An escalated focus on insourcing and manufacturing could increase the benefits GM would reap from Biden’s infrastructure plan.