Obama’s plans for increased funds for infrastructure, tax breaks face uphill battle in Congress

TRANSCRIPT:

President Obama is looking for ways to boost the economy: he wants to extend some $130 billion in tax breaks to businesses, and invest billions more in roads and railways. As FSRN’s Jacob Fenston reports, these proposals should have bipartisan appeal, but still face a tough road ahead in Congress.

Speaking in Milwaukee on Monday, President Obama announced his plan to spend $50 billion on the nation’s transportation network. He wants to rebuild 150,000 miles of road:

PRESIDENT OBAMA: That’s enough to circle the world six times.That’s a lot of road.

He wants to lay 4,000 miles of train tracks:

OBAMA: Enough to stretch coast to coast.

He also wants to restore runways, and update air-traffic control systems.

Republican reaction was swift and harsh. In a statement, Senate Republican Leader Mitch McConnell called the proposal a “cobbled-together stimulus bill with more than $50 billion in new tax hikes.”

Douglas Holtz-Eakin is president of the conservative American Action Forum. He’s not optimistic about Obama’s proposals:

DOUGLAS HOLTZ-EAKIN: I think what they have in common is that we do not know yet how he’s going to pay for them. There’s a commitment to make these budget-neutral, and depending on what you do on the other end of this equation, it could undercut any stimulus you got out of the proposals.

“Stimulus” is a dirty word this campaign season. But Obama’s other job-creation proposals are tax breaks; in fact, they are ideas first floated by Republicans.

On Wednesday, Obama will speak in Cleveland. According to media reports, he’ll propose extending a $100 billion tax credit that lets businesses write off research and development expenses. The R&D tax credit was first passed as part of a Republican-sponsored bill in 1981 and it’s been extended 13 times. President George W. Bush wanted to make the credit permanent, and now Obama does too.

HOLTZ-EAKIN: If businesses have already been expecting it to be extended every year, making it permanent on paper really doesn’t change their business planning much, so it probably won’t have much impact.

A third proposal, also expected Wednesday, would allow companies to write off 100 per cent of the cost of new equipment in the year it’s purchased, rather than over a number of years.

Christian Weller is a Senior Fellow at the Center for American Progress. He says Obama’s proposals are the right size and have the right target — aimed at continuing growth in the private sector.

CHIRSTIAN WELLER: What the President is basically suggesting is to spend some money to maintain that momentum by getting companies to invest sooner and more than they otherwise would.

Employment numbers released last week showed the jobless rate increasing — the official rate rising to 9.6 per cent, and the so-called “real unemployment rate” rising to 16.7 per cent.  So Democrats are desperate to be getting something done. But Weller says Republicans are playing politics, and will likely block Obama’s proposals.

WELLER: They should, in a normal world, have a lot of bipartisan support. Their focus is to strengthen the private sector. But at this point the opposition party wants to play more politics with policies, and I think will oppose this, even though the substance is something they should support.

Weller says Republicans and Democrats typically support transportation funding and, ideologically, Republicans should rally around tax credits. But with midterm elections looming, there’s not much time left to pass legislation.

- Jacob Fenston, FSRN, Washington