Obama’s election campaign initiated with unveiling of infrastructure plan

President of the US Barack Obama proposed a six-year plan to rebuild aging roads, railways and runways with an initial $50 billion investment. With a view to leap forward in jobs’ creation Obama declared “We are going to rebuild 150,000 miles (240,000 km) of our roads — that’s enough to circle the world six times. … We’re going to lay and maintain 4,000 miles (6,400 km) of our railways — enough to stretch coast-to-coast,” Obama told a labor rally in Milwaukee. The promise of election campaign, one of Obama’s several initiatives of creating jobs through spending on infrastructure building was immediately rejected by the Republicans. Many believed that Republicans would control House of Representatives after Nov 2 congressional elections. With fellow Democrats facing punishment from recession-weary voters in November, Obama is under pressure to do more to create jobs and bring down the stubbornly high 9.6 percent unemployment rate, even as economists agree he has few good options left.

Nearly $14 trillion economy would not change significantly in just 2 months ahead of elections. Economists point out that investments in infrastructure typically do not stimulate the economy quickly. A centerpiece of Obama’s new plan is a proposal for the U.S. Congress to increase and permanently extend a tax credit for business research and development. The tax credit proposal, which was widely expected by investors, would cost $100 billion over 10 years. He is to lay out the plan on Wednesday in Cleveland. While Obama declared some jobs would be created immediately by the infrastructure overhaul, a senior administration official told reporters the plan would not create jobs until 2011.


There are skeptics whether Obama’s drive will work out in the face of stiff opposition from republicans. The White House stressed the plan would not add to the record U.S. deficit, a key issue for voters. The American Petroleum Institute, which represents major U.S. oil and gas companies, said additional taxes would drive energy investment, including jobs, overseas. “Now is the time to create American jobs, not eliminate them,” API spokeswoman Cathy Landry said. Obama told the Milwaukee rally he would work with Congress to make sure the plan was fully paid for. “We don’t need more government ‘stimulus’ spending — we need to end Washington Democrats’ out-of-control spending spree, stop their tax hikes, and create jobs by eliminating the job-killing uncertainty that is hampering our small businesses,” Boehner said.

Obama’s Infrastructure Plan

Under the infrastructure plan, Obama is proposing to:

  • Rebuild 150,000 miles (240,00 km) of roads;
  • Construct and maintain 4,000 miles (6,400 km) of rail;
  • Rehabilitate or reconstruct 150 miles (240 km) of runway and modernize the air traffic control system and;
  • Set up an infrastructure bank to leverage private, state and local capital to invest in projects.

Transportation construction spending would likely help companies like equipment maker Caterpillar Inc, privately held engineering firm Parsons Corp, and conglomerate General Electric Co. The administration official said a “substantial number of jobs” would be created by the infrastructure projects. Transportation experts say 35,000 jobs are created for every $1 billion in transportation construction investment. The administration said the proposal unveiled on Monday would be part of a long-term transportation reauthorization that traditionally includes highway and rail funding. The $50 billion would represent a significant portion of the spending in the first year of any new transportation funding measure, an administration official said. Congress has yet to comprehensively address new transportation legislation. The previous measure expired in 2009. One plan floated in the House would spend about $500 billion over six years. Obama used his appearance in Milwaukee to set the tone for the fall campaign. Monday’s Labor Day holiday marks the informal start of the election campaign season.

Source: Reuters | 07/09/2010

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