President Barack Obama, scrambling to spur job creation, proposed a six-year plan on Monday to rebuild U.S. infrastructure with an initial $50 bln investment and prepared new business tax cuts.
"We are going to rebuild 150,000 miles (240,000 km) of our roads — that's enough to circle the world six times. … We're going to lay and maintain 4,000 miles (6,400 km) of our railways — enough to stretch coast-to-coast," Obama told a labor rally in Milwaukee where several thousand supporters cheered his every line.
The infrastructure plan, one of several initiatives Obama is unveiling this week, was immediately criticized by Republicans, who many analysts predict could win control of the House of Representatives in the November 2 congressional elections.
With fellow Democrats facing punishment from recession-weary voters, Obama is under pressure to do more to create jobs and bring down the stubbornly high 9.6% unemployment rate, even as economists agree he has few good options left.
An administration official said Obama will propose on Wednesday in Cleveland that businesses be allowed to write off all their new investments in plant and equipment through 2011.
The plan would cut business taxes by some $200 bln over two years, the official said. The administration hope is that businesses worried about the sagging U.S. economy will nonetheless want to take advantage of the tax break by going ahead with plans for plant and equipment investments.
Obama will also announce a proposal for the U.S. Congress to increase and permanently extend a tax credit for business research and development. It would cost $100 bln over ten years.
Economists are skeptical any measures Obama takes now will make a swift difference in the $13.2 trln U.S. economy. They point out that investments in infrastructure, for example, typically do not stimulate the economy quickly.
While Obama declared some jobs would be created immediately by the infrastructure overhaul, a senior administration official told reporters the plan would not create jobs until 2011.
"This is not a stimulus, immediate-jobs plan," the official said.
"One thing (Obama) is willing to put on the table is closing some of the tax loopholes for big oil and gas companies that currently get subsidies from taxpayers that they certainly don't need. He thinks that is a perfectly good 'pay-for' to get this up and running," the administration official said.
The American Petroleum Institute, which represents major U.S. oil and gas companies, said additional taxes would drive energy investment, including jobs, overseas. "Now is the time to create American jobs, not eliminate them," API spokeswoman Cathy Landry said.
Senate Republican leader Mitch McConnell called it a "last-minute cobbled-together stimulus bill" and the Republican leader of the House, John Boehner, was equally dismissive.
"We don't need more government 'stimulus' spending — we need to end Washington Democrats' out-of-control spending spree, stop their tax hikes, and create jobs by eliminating the job-killing uncertainty that is hampering our small businesses," Boehner said.
DETAILS OF PLAN
Under the infrastructure plan, Obama is proposing to:
– Rebuild 150,000 miles (240,00 km) of roads;
– Construct and maintain 4,000 miles (6,400 km) of rail;
– Rehabilitate or reconstruct 150 miles (240 km) of runway and modernize the air traffic control system and;
– Set up an infrastructure bank to leverage private, state and local capital to invest in projects.
Transportation construction spending would likely help companies like equipment maker Caterpillar Inc, privately held engineering firm Parsons Corp, and conglomerate General Electric Co.
The administration official said a "substantial number of jobs" would be created by the infrastructure projects. Transportation experts say 35,000 jobs are created for every $1 bln in transportation construction investment.
