Tuesday, September 7, 2010

Wonkbook: Obama proposes $50B for infrastructure, $100B for R&D tax credit; And the Promblems it Faces

From the Washington Post's Wonkbook:
The Obama administration's next round of stimulus proposals are coming into focus, though the administration would rather prefer that we call them something other than "stimulus proposals." The much-rumored payroll-tax holiday is off the table -- at least for now. But there's a $50 billion infrastructure investment program, a $100 billion proposal to make the R&D tax credit permanent, and a $200 billion idea to allow companies to deduct the full cost of the capital investment in 2011. Add in the small business bill that's sitting still in the Senate, and the anti-business White House has thrown its muscle behind hundreds of billions of dollars in tax cuts and credits for, well, business.

Speaking of tax cuts and credits, former OMB director Peter Orszag makes his debut in the New York Times this morning with a column arguing that the Bush tax cuts should be extended until 2013 -- and then allowed to lapse altogether. Yes, even the middle-class ones. That might be more important than you think: Though it's true that money can't buy you happiness (at least not after $75,000 a year), it can buy you a feeling of deep satisfaction.
All that and more -- including a William Shatner profile -- in Wonkbook.
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Obama wants $50 billion for infrastructure investment, reports Peter Slevin: "White House officials said the $50 billion in new government spending would be the first installment of a six-year transportation strategy that would include investments in high-speed rail and air traffic control. To pay for it, the administration would raise taxes on oil and gas companies...If approved by Congress, the infrastructure money would be used to build or repair 150,000 miles of road, 4,000 miles of railroad track and 150 miles of runways, the officials said. The proposal includes creating an 'infrastructure bank' to prioritize projects and attract private funds."

Obama will also propose a $100 billion business tax credit this week -- but no payroll-tax holiday. Anne Kornblut and Lori Montgomery report : "The business proposal - what one aide called a key part of a limited economic package - would increase and permanently extend research and development tax credits for businesses, rewarding companies that develop new technologies domestically and preserve American jobs. It would be paid for by closing other corporate tax loopholes, said the official, speaking on condition of anonymity because the policy has not yet been unveiled."

"The White House has decided to forgo a broad-based payroll-tax holiday at this point, officials have said. That proposal, which had been part of earlier discussions with key congressional officials, would have been an expensive measure, potentially costing hundreds of billions of dollars. It also could have deprived Social Security of needed cash even as Democrats are accusing the GOP of plotting the program's demise on the campaign trail."

And don't forget tax write-off for capital investments, reports Jackie Calmes: "It would cost an estimated $200 billion in revenues, though the ultimate net loss would be $30 billion over 10 years, administration officials say, since businesses would eventually deduct the depreciated value of the equipment in any case....A draft paper on the proposal permitting businesses to write off the full costs of capital spending in 2010 and 2011 said it 'would be the largest temporary investment incentive in American history.'"...MORE

From Time's Swampland blog:

On this Labor Day, President Obama announced that he's calling on Congress to pass an additional $50 billion in infrastructure investment. While I'm sure this pleased the construction, steel, plumbers and transportation unions – and, let's face it, unions haven't been the happiest of groups of late – I see several problems with this request in Congress.
  1. Policy. Remember what happened to Obama's last $50 billion request – for aid to the states? A $26 billion version finally passed last month after the House had to come back in to special session, two months after the President's request. That bill saved more than 100,000 teaching jobs, a tough(er) one for Republicans to vote against. But infrastructure investments --which is a nice way of saying stimulus money? The GOP would love to vote against growing the government, as they are bound to call it, as it only gins up their base. Yes, as my colleague Michael Crowley noted in a cover story a few weeks ago, the economy really does need another shot in the arm. But this close to an election, I can't imagine Senate Republicans allowing this through unless Wall Street is tanking 700 points a day, and even then it'd be a tough vote.
  3. Politics. Speaking of elections, I know the base is depressed and labor is a big part of the base, but when congressional Democrats asked Obama to talk about jobs and the economy this most certainly was not what they had in mind. The very last thing vulnerable Blue Dogs want to be discussing right now is another big, partisan spending bill (if the GOP statements out today were any indication, Dems would pretty much have to go it alone again on this bill). Obama said the plan would be fully paid for, though he did not say how. Paying for the $26 billion in aid to states was a headache that provoked three filibusters and a veto threat. Watching Congress, er, Democrats, haggle their way through another big spending bill is not high on the list of dream October surprises for any Dem....MORE