The president’s pandering to public unions has backfired and now he wants to create an “infrastructure bank” which would be run by the government but would pool tax dollars with private investment.
The New York Times reports Obama Offers a Transit Plan to Create Jobs.
President Obama, looking to stimulate a sluggish economy and create jobs, called Monday for Congress to approve major upgrades to the nation’s roads, rail lines and runways — part of a six-year plan that would cost tens of billions of dollars and create a government-run bank to finance innovative transportation projects.
Central to the plan is the president’s call for an “infrastructure bank,” which would be run by the government but would pool tax dollars with private investment, the White House says.
some leading proponents of such a bank — including Gov. Arnold Schwarzenegger, Republican of California; Gov. Ed Rendell, Democrat of Pennsylvania; and Michael R. Bloomberg, the independent mayor of New York — would like to see it finance a broader range of projects, including water and clean-energy projects. They say such a bank would spur innovation by allowing a panel of experts to approve projects on merit, rather than having lawmakers simply steer transportation money back home.
“It will change the way Washington spends your tax dollars,” Mr. Obama said here, “reforming the haphazard and patchwork way we fund and maintain our infrastructure to focus less on wasteful earmarks and outdated formulas, and more on competition and innovation that gives us the best bang for the buck.”
Mish Comment: What a bunch of crock. If the president was genuinely interested in keeping costs down he would ask Democrats to scrap Davis Bacon and collective bargaining.
The White House did not offer a price tag for the full measure or say how many jobs it would create. If Congress simply reauthorized the expired transportation bill and accounted for inflation, the new measure would cost about $350 billion over the next six years. But Mr. Obama wants to “frontload” the new bill with an additional $50 billion in initial investment to generate jobs, and vowed it would be “fully paid for.” The White House is proposing to offset the $50 billion by eliminating tax breaks and subsidies for the oil and gas industry.
Mish Comment: If the bill was fully paid for the the President ought to have the balls to say how. In simple terms he is either disingenuous or a blatant liar. Is there not even $50 billion in military spending he could cut? Nothing?
After months of campaigning on the theme that the president’s $787 billion stimulus package was wasteful, Republicans sought Monday to tag the new plan with the stimulus label. The Republican National Committee called it “stimulus déjà vu,” and Representative Eric Cantor of Virginia, the House Republican whip, characterized it as “yet another government stimulus effort.”
But Governors Rendell and Schwarzenegger, and Mayor Bloomberg, who in 2008 founded a bipartisan coalition to promote transportation upgrades, praised Mr. Obama. And in policy circles, the plan, especially the call for the infrastructure bank, is generating serious debate.
Mish Comment: Schwarzenegger and Mayor Bloomberg both have no backbone. Bloomberg panders to unions and until recently Schwarzenegger refused to play hardball. All there are hoping for a large share of the transit plan.
There is no shortage of projects in search of money. The problem, analysts say, is that Congress, which would create the bank, is not known for its ability to single out strategic priorities for growth. Instead, it traditionally builds broad support by giving a little something to everybody — Montana, for instance, would get a small amount of Amtrak money in return for its support for improvements along the Northeast corridor.
Samuel Staley, director of urban growth and land-use policy for the Reason Foundation, a libertarian research group, said the best way to spend money efficiently would be to establish the bank as a revolving loan fund so that money for new projects would not become available until money for previous projects had been repaid.
Mr. Staley expressed concern that in their zeal to spur growth and create jobs, Congress and the Obama administration would not impose such limits.
“With the $800 billion stimulus program, they were literally just dumping money into the economy,” he said. “There was little legitimate cost-benefit analysis.”
Mish Comment: There is never a shortage of ways Congress can and will waste taxpayer money. This will not change unless and until there is balanced budget amendment. Until taxes have to be raised to fund projects, Congress and any
Business Tax relief
In addition to the Infrastructure Bank, Obama to Propose Business Tax Relief, Spending to Spur Growth
Obama tomorrow will announce an expanded tax incentive to encourage business investment, an administration official said on condition of anonymity. Obama also will urge Congress to extend permanently and expand a research-and-development tax credit for businesses, costing about $100 billion over a decade. He began the rollout of initiatives yesterday in Milwaukee, calling for $50 billion in the first of a six-year program to fix roads, railways and runways and modernize the air-traffic control system.
Elections in less than two months to decide U.S. House seats and about a third of the Senate are focused on unemployment near 10 percent and a budget deficit swelled by the government’s financial-system bailout. Obama is traveling this week to Midwestern states where joblessness is hurting some Democratic candidates’ chances of getting elected.
At an event tomorrow in Cleveland, Obama will propose allowing companies to fully deduct the cost of purchasing equipment such as tractors, wind turbines, computers and solar panels, the official said.
In 2008 and 2009, companies could deduct 50 percent of their costs using so-called bonus depreciation. The latest proposal would increase the tax break to 100 percent through the end of 2011 and would make it retroactive to Sept. 8, 2010, the official said. The bonus depreciation measure would cost $30 billion over 10 years. It and the proposed permanent extension of the research tax credit have garnered the support of the business community.
Speaking to union members and their families on the Labor Day holiday in the U.S., Obama called for an “infrastructure bank” and requested money to rebuild 150,000 miles (241,400 kilometers) of roads, construct and maintain 4,000 miles of rail and overhaul 150 miles of runways.
Senate Republican Leader Mitch McConnell, of Kentucky, responded in a statement that the “latest plan for another stimulus should be met with justifiable skepticism,” and “Americans are rightly skeptical about Washington Democrats asking for more money.”
“Infrastructure programs are always popular for stimulus talk but disappointing in practice,” Douglas Holtz-Eakin, president of the Washington-based American Action Forum and a former adviser to the 2008 presidential campaign of Senator John McCain, a Republican from Arizona.
Holtz-Eakin also questioned whether Congress will agree to more spending, given signs of growing voter opposition to a deficit that the Congressional Budget Office estimates will reach $1.3 trillion in the fiscal year ending Sept. 30, near last year’s record shortfall of $1.4 trillion.
“The ratio of politics to substance in this effort is infinite,” Holtz-Eakin said.
Things are looking very bleak for Obama in the midterm elections, and even Democrats are starting to shy away from many of his policies, including healthcare.
For more on Labor Day pandering, please see Labor Day Insanity from Clinton’s Secretary of Labor
Mike “Mish” Shedlock
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