This story was updated Sept. 15. The earlier version had an incorrect figure for the total allocated to infrastructure spending.
President Obama's $447-billion job-creation package would offer a significant lift to the struggling construction industry, including $105 billion in infrastructure spending plus new or extended tax incentives aimed at small businesses. The tax breaks could find receptive ears in Congress, but the funding for transportation, school upgrades and housing faces a steep, uphill trek.
In outlining his proposed “American Jobs Act” on Sept. 8, Obama urged lawmakers to pass it “right away.” Immediate action isn't likely, however. House Republicans, who have battled Obama since they assumed control of the chamber in January, say they won't accept the plan as the President presented it, but want their own jobs-producing ideas to be included.
GOP leaders didn't shut the door completely. House Speaker John Boehner (R-Ohio) said Obama's proposals “merit consideration,” but added, “We hope he gives serious consideration to our ideas as well.” House Majority Leader Eric Cantor (R-Va.) said, “What we should do is go for the things in the package that we both can agree on,” citing small-business tax breaks as one example.
Obama pledged that the plan would not increase the federal deficit. But more GOP criticism arose after the White House said on Sept. 12 that $400 billion in offsetting revenue would come from limiting deductions and exemptions for individuals earning more than $200,000 and families with income over $250,000.
Obama's $105 billion for infrastructure spending would be welcome for construction, particularly as the 2009 stimulus act's public-works funds dry up. The total includes $50 billion for transportation, $25 billion to upgrade public-school buildings, $5 billion for community-college facilities, $15 billion to repair abandoned or foreclosed housing and commercial buildings, and $10 billion to launch an infrastructure bank.
Some of those elements have a familiar ring. Obama called for a $50-billion infusion for transportation in September 2010 and included it in his 2012 budget request, released in February. But Todd Hauptli, American Association of Airport Executives senior executive vice president, notes the administration couldn't get that $50 billion enacted last year, when Democrats had majorities in the House and Senate. He says, “It seems unlikely that they will get it through a Republican-controlled House. … And finding Republican support for increased spending, however deserving, is hard to come by these days.”
Andrew Goldberg, American Institute of Architects senior director of federal relations, says his group was pleased that, in Obama's new infrastructure proposal, “He was talking not just about roads and bridges, which are important, but also got across the message that buildings are important.” If, however, the House concentrates on items that its GOP leaders think could be approved, Goldberg says, “It's not very clear at all that some of the infrastructure investments can get passed.”
Some Obama tax proposals may fare better. Stephen Sandherr, Associated General Contractors of America CEO, says there is receptivity in Congress to extend the 2011 payroll-tax cut for individuals. In particular, small firms would benefit from a provision that would halve their payroll taxes for the first $5 million in payroll and eliminate those taxes for new hires. The plan would extend, through 2012, companies' ability to “expense” capital-equipment purchases and delay for one year government agencies' 3% withholding of contractor payments.
Sandherr sees a chance an infrastructure spending boost could emerge from the congressional deficit-reduction “supercommittee.” He says if the panel recommends a wide-ranging plan that cuts tax rates and limits deductions, it might also include infrastructure finance options, such as added revenue for the Highway Trust Fund. He cautions, “But that would have to be part of some grand bargain that right now looks pretty elusive.”
David Bauer, American Road & Transportation Builders Association senior vice president for government affairs, says, “It's pretty clear that the President would sign infrastructure spending. It's pretty clear that the House can pass tax cuts. The thing that I don't believe that anybody can gauge at this point is, what is the magic combination that would enable something to pass the House [and] Senate and get signed by the President?”
|Highways / Bridges||$27 billion|
|Intercity passenger rail||$2 billion|
|High-speed passenger rail||$4 billion|
|TIFIA loans / TIGER grants||$5 billion|
|National Infrastructure Bank||$10 billion|
|K-12 school upgrades||$25 billion|
|Community-college facilities upgrades||$5 billion|
|Rehab of distressed housing, other buildings||$15 billion|