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AED Analysis: Obama's Jobs Act Falls Short
AED’s President and CEO Toby Mack issued the following statement today regarding President Obama’s American Jobs Act, which was unveiled during the president’s address to Congress and the nation Thursday, Sept. 8.
“We won’t mince words: We were disappointed by President’s Obama’s long-awaited jobs speech Thursday evening. We’re still wading through the proposal and waiting to see more details, but from what we’ve heard and read so far, the falls well short of the mark. Here’s our take:
First, the good news: The president proposed extending the 100 percent depreciation bonus for another year (it’s currently set to fall to 50 percent in 2012). And in his impassioned plea for payroll tax reductions, he sounded almost Reaganesque. But that’s about where it ended. As discussed below, his infrastructure proposals were disappointing; there are major practical problems some of the ideas, and at its worst, the speech devolved into hackneyed class warfare.
Given all the prespeech hype, we were hoping the White House would finally make highways a priority and lay out a bold, new, long-term plan to rebuild America’s crumbling surface transportation network. The president didn’t deliver. He has said he wants to make a $50 billion "immediate" investment in highways, transit, rail, and aviation. That may help around the margins, but the 2009 stimulus bill taught us an important lesson: Contractors aren’t going to make major new capital investments or staff up for shovel-ready projects; they need a sense of certainty about what markets are going to look like for the next couple years. They won’t get that from the Obama plan.
Our concerns about the Jobs Act don't end there. For example the president wants to spend more than 10 percent of the infrastructure funding on high-speed and passenger rail. Both would facilitate personal travel in some parts of the country and generate some economic activity for our members, but they simply don’t serve national economic objectives the way new roads and bridges would. Obama is also calling for a National Infrastructure Bank. It would help get some projects built, but won’t get us anywhere close to the level of investment we need and won’t work for certain types of projects (e.g., rural roads where toll revenues wouldn’t cover project costs). Build America Bonds, infrastructure banks, and other creative financing tools have their place, but are no substitute for direct government investment in new transportation assets.
There are other parts of the plan that concern us. The president wants to spend $15 billion to employ construction workers to refurbish foreclosed upon businesses and homes. There’s no doubt that in the short term that would help workers, contractors, and even some distributors. But renovating private buildings doesn’t sound like a proper function of the federal government; it’s the responsibility of the owner or the bank. The White House is proposing to spend $25 billion to renovate 35,000 public schools across the country. Sure this will help some in the construction industry in the short term, but is it something the federal government should be doing, or is it a state or local obligation? Incentives to businesses to hire the long-term unemployed will result in discrimination against workers who’ve just been laid off. A tax credit for hiring disabled veterans sounds patriotic, but it would probably be a nightmare to implement under the Americans with Disabilities Act. Recent revelations about how the president wants to pay for the $400 billion plan – including raising taxes on high earners and job creators – lead us to wonder whether the Jobs Act is really an economic proposal or a just political ploy.
AED's perspective on the Obama plan isn’t based on partisanship. We’re disappointed and frustrated by the failure of the House GOP leadership to confront the infrastructure crisis. Few on Capitol Hill understand that there’s a difference between wasteful spending and investments in capital assets like roads and bridges. Cutting highway investment by 35 percent as the House has proposed would be a disaster for the economy and the construction industry. That’s why we’re helping to lead lobbying efforts in support of a reauthorization proposal by Sen. Barbara Boxer (D-CA).
Call it a recession, a depression, stagsession or whatever you want. The simple reality is that the construction industry is suffering through the worst economic conditions in several generations and construction unemployment is well above the national average. Until the construction sector recovers, it will be a drag on the rest of the economy. And it won’t recover until Congress and the president get their priorities straight and work together on issues that will strengthen the foundation of the U.S. economy. We think the highway bill and restoring long-term certainty to the tax code should be at the top of the list.
But that's just our opinion, tell us what you think of the president’s plan by sending us an e-mail (email@example.com) or sending us a note on Twitter (@aedgovaffairs).”
Article Date: 2011-09-12
Source: Associated Equipment Distributors
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