Infrastructure Funds, Tax Cuts Can Create Jobs, Obama Says

This story appears in the Feb. 1 print edition of Transport Topics.

In his first State of the Union address, President Obama called on Congress to pass legislation to create jobs through infrastructure spending and tax cuts, but his proposed freeze in nondefense spending starting in 2011 could complicate the passage of a new highway bill, observers said last week.

“Jobs must be our No. 1 focus in 2010, and that’s why I’m calling for a new jobs bill tonight,” Obama said during his Jan. 27 address to Congress.

As part of those efforts, Obama cited the importance of putting “Americans to work today, building the infrastructure of tomorrow.”

Obama followed the announcement the next day by issuing $8 billion for 13 high-speed rail projects nationwide.

“There are projects like that all across this country that will create jobs and help move our nation’s goods, services and information,” Obama said.

Timothy Lynch, senior vice president of federation relations and strategic planning for American Trucking Associations, said that although parts of Obama’s speech were encouraging, the administration “seems enamored with high-speed rail, almost to the exclusion of everything else on infrastructure, and that’s unfortunate.”

Even so, Lynch praised Obama’s “acknowledgment that credit is awfully tight.” Lynch said it is difficult to see how manufacturers can expand plants, hire new workers and create more goods to ship if they can’t gain access to capital.

During his address, Obama proposed shifting $30 billion repaid by large banks from the Troubled Asset Relief Program “to help community banks give small businesses the credit they need to stay afloat.”

Obama also proposed a series of small-business tax credits for em-ployers who hire new workers or raise wages, as well as to eliminate all capital gains taxes on small business investment and provide a tax incentive for all large businesses and all small businesses to invest in new plants and equipment.

“We’re encouraged . . . that the president has identified the need for a host of tax measures to spur new small business activity,” said Brian Turmail, spokesman for the Associated General Contractors of America.

Obama also used the speech to spur the Senate into acting on a jobs bill — following the lead of the House, which passed one in December.

“As the first order of business this year, I urge the Senate to do the same, and I know they will,” he said. “I want a jobs bill on my desk without delay.”

Obama said his administration was “prepared to freeze government spending for three years,” beginning in 2011.

However, industry and government officials were unsure of how that freeze might affect transportation spending and the chances for a new highway bill.

“It all depends on how they would structure a freeze,” Lynch said. “If they’re not passing a reauthorization bill, it’s difficult to say what impact it could have, because there are too many moving parts.”

Similarly, a spokesman for Rep. James Oberstar (D-Minn.),  chairman of the House Transportation and Infrastructure Committee, said there were not yet enough details on the freeze to know how it might affect highway funding legislation.

“We’re hearing lots of different messages,” AGCA’s Turmail said, adding that it was “almost a moot question without an answer to what are they going to do about the Highway Trust Fund.

Earlier in the week, the Congressional Budget Office projected that by year-end, the fund would have only $3 billion remaining, or about one month of spending during peak construction season.

“Obviously, you need to increase revenue for the Highway Trust Fund if you want to maintain or increase investments in infrastructure, which everyone, including the president, seems to agree that we need to,” Turmail said.

On Feb. 1, the administration is expected to present its fiscal 2011 budget proposal to Congress, which officials expect will answer some of the transportation funding questions.

Obama also proposed a “national export initiative” aimed at doubling U.S. exports over the next five years.

The president also said the nation needed “more production, more efficiency [and] more incentives,” to generate new, clean energy jobs.

Part of that effort, he said, required “making tough decisions” about opening new offshore areas for oil and gas development and continue investment in advanced biofuels and clean coal technologies.