Milwaukee: US President Barack Obama, scrambling to jump-start job creation in a sluggish US economy, announced on Monday a six-year plan to revamp aging roads, railways and airport runways with an initial $50 billion investment.
“Over the next six years, we are going to rebuild 150,000 miles of our roads -- enough to circle the world six times. We’re going to lay and maintain 4,000 miles of our railways -- enough to stretch coast-to-coast,” Obama will say, according to remarks prepared for delivery.
The plan is one of several initiatives that Obama, who is struggling to persuade Americans that his economic policies are working, is due to unveil this week.
With fellow Democrats facing punishment from recession-weary voters in November congressional elections, Obama is under pressure to do more to create jobs and bring down the stubbornly high 9.6% unemployment rate, even as economists agree he has few good options left.
Administration officials say Obama will ask the US Congress on Wednesday to increase and permanently extend a tax credit for business research as a way of boosting job growth. The proposal, which was widely expected by investors, would cost $100 billion over 10 years.
Economists are skeptical any measures Obama takes now will make a significant difference in the $13.2 trillion US economy and point out that investments in infrastructure typically do not stimulate the economy quickly.
A senior Obama administration official acknowledged the planned infrastructure overhaul would not have an immediate impact on the economy and said the first jobs would not be created until 2011.
“This is not a stimulus, immediate-jobs plan,” the official said, briefing reporters ahead of Obama’s formal announcement in Milwaukee later on Monday.
Doubts from deficit hawks
Obama stressed the plan would not add to the record US deficit, a key issue for voters, saying it would be fully paid for. “We’re going to work with Congress to see to that,” he said.
But he is likely to face skepticism from deficit hawks among Republicans, who many experts predict will make big gains in November, possibly winning control of the House and maybe the Senate.
“A last-minute cobbled-together stimulus bill with more than $50 billion in new tax hikes will not reverse the complete lack of confidence Americans have in Washington Democrats’ ability to help this economy,” Senate Republican leader Mitch McConnell said in a statement.
“After the administration pledged that a trillion dollars in borrowed stimulus money would create 4 million jobs and keep the unemployment rate under 8%, their latest plan for another stimulus should be met with justifiable skepticism,” he said.
Asked how the administration would pay for the plan, the senior administration official said one option was to scrap some tax breaks for oil and gas companies.
“One thing (Obama) is willing to put on the table is closing some of the tax loopholes for big oil and gas companies that currently get subsidies from taxpayers that they certainly don’t need. He thinks that is a perfectly good ‘pay-for’ to get this up and running,” the official said.
Details of 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,OOO jobs are created for every $1 billion in transportation construction investment.
Obama will use appearances at a labour rally in Milwaukee on Monday afternoon and Cleveland on Wednesday to set the tone for the fall campaign. Monday’s Labour Day holiday marks the informal start of the election campaign season.
He is expected to argue that Democratic policies have stopped the bleeding and produced some economic growth, while re-electing Republicans would mean a return to ideas that propelled the country into the worst recession in 70 years.
Obama’s visit to Cleveland promises to be more strategic. It is the city where the top House Republican, John Boehner, recently urged the president to fire his economic team.
Other items that Obama could talk about this week are a payroll tax holiday, extending tax cuts for the middle class and increasing money for clean energy.