President Barack Obama this week is proposing to expand tax relief for businesses and boost federal spending on the nation’s transportation system to help bolster an economy that’s losing jobs heading into the November congressional elections.
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 U.S. over a decade. He began the rollout of initiatives yesterday in Milwaukee, calling for $50 billion U.S. in the first of a six-year program to fix roads, railways and runways and modernize the air-traffic control system.
"All of this will not only create jobs now, but will make our economy run better over the long haul," Obama said, announcing his public-works program. "It’s a plan that history tells us can and should attract bipartisan support."
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% 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.
Obama’s proposals, many of which he has introduced before, will run up against a tight congressional calendar and election-year politics. The Senate is scheduled to return to Washington Sept. 13, and the House reconvenes the next day. Lawmakers will be at work for about three weeks before leaving again to campaign for the Nov. 2 elections.
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% of their costs using so-called bonus depreciation. The latest proposal would increase the tax break to 100% 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.
Every president since Bill Clinton has backed a permanent extension of the research tax credit, which Congress extends only temporarily because of its high cost.
Speaking to union members and their families on the Labour Day holiday in the U.S., Obama called for an "infrastructure bank" and requested money to rebuild 241,400 kilometres of roads, construct and maintain about 7,000 kms. of rail and overhaul 250 kms. 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."
The Obama administration will work with Congress to ensure the rebuilding plan is fully funded, and a "significant portion of the new investments would be front-loaded in the first year," the White House said in a statement. The spending "will not add to the deficit over time," Obama said.
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