November 1, 2011

More taxes + More spending = More unemployment

 

Despite bipartisan opposition, President Obama and Senate Democrats have proposed further incremental consideration of his so-called “American Jobs Act.”  This week Senate Majority Leader Harry Reid (NV) plans to consider an additional $60 billion in temporary stimulus spending paid-for with permanent, job destroying tax increases.  According to the White House summary of the President’s plan, the bill would appropriate $50 billion in stimulus spending for highway, transit, rail and aviation over ten years.  The bill would also provide $10 billion to create a Fannie Mae/Freddie Mac style national infrastructure bank to leverage private and public capital to invest in projects.  The bank would have an implicit government guarantee, exposing the taxpayers to risk of loss.

To offset the temporary spending, the proposal would contain a 0.7 percent permanent tax increase on Americans earning $1 million annually.  The millionaire surtax contradicts the President’s stated goal of creating jobs by burdening the very job creators the nation needs to put Americans back to work.  According to the Department of Treasury, 41 percent of all business income reported on individual returns would be hit by the surtax.     

 

HIGHLIGHTS OF THE BILL

 

IMMEDIATE TRANSPORTATION STIMULUS SPENDING ($50 billion)

• $27 billion for highway restoration, repair, and construction projects;
• $6 billion for capital projects to modernize existing systems and rehabilitate buses and bus facilities;
• $5 billion to award grants on a competitive basis;
• $4 billion for existing intercity passenger rail networks and develop new high speed rail corridors;
• $3 billion for transit capital projects, particularly for the purchase of new buses and for the repair and rehabilitation of existing rail and bus systems;
• $2 billion to Amtrak for the repair, rehabilitation, and upgrade of Amtrak’s assets and infrastructure;
• $2 billion for airport development grants; and
• $1 billion to conduct research and development and demonstrations and to acquire, establish, and improve FAA air navigation facilities.

FACTS ABOUT TRANSPORTATION STIMULUS SPENDING

• The original $1.2 billion “stimulus” contained more than $47 billion of transportation spending that failed help bring unemployment below 9 percent. 
• According to the White House, there is still $15 billion for transportation from the first stimulus that it has yet to spend.

FEDERAL INFRASTRUCTURE BANK ($10 billion)

• Establishes the American Infrastructure Financing Authority (AIFA), also referred to as the “infrastructure bank” – as a wholly owned government corporation that will provide direct loans and loan guarantees to facilitate investment in “economically viable” infrastructure projects. 
• An eligible project must have a cost that is reasonably anticipated to equal or exceed $100 million, with the exception of rural projects.
• The maximum amount of new direct loans and loan guarantees in AIFA’s first two fiscal years is limited to $10 billion each year.
• This increases to $20 billion per year after the second year of operations and through the ninth year, and increases to $50 billion per year after the ninth year of operations. 

FACTS ABOUT THE FEDERAL INFRASTRUCTURE BANK

• Like Fannie Mae and Freddie Mac, most infrastructure bank loans would exposes taxpayers to the risk of default.
• The Wall Street Journal Editorial Board said of the Infrastructure Bank, “Instead of a Washington-centric bank that picks winners and losers, Congress would be wise to move in the opposite direction: devolving most public-works decisions to the state and local levels.”

 

What they’re saying in the news

 

In today’s Washington Post, Charles Lane editorializes on the ‘myth’ that America’s infrastructure is in bad shape.  Lane points out that “for all its shortcomings, U.S. infrastructure is still among the most advanced if not the most advanced.” 

 

“Senate Majority Leader Harry Reid declared Monday that Democrats are the only ones “fighting to create good-paying American jobs.” But he again could face a handful of defections from his own party when he brings the next jobs bill to the floor this week.”   (POLITICO, 10/31)

 

“The Senate also could vote on an infrastructure funding proposal, one of four pieces of President Obama’s jobs bill that Democrats are moving. Republicans are expected to filibuster the measure.”  (NATIONAL JOURNAL, 10/31)

 

“Rebuffed twice in their attempts to push through President Obama’s jobs proposals, Senate Democrats are ready to try again.  The Senate will hold a vote the first week of November on the $60 billion infrastructure portion of Obama's Jobs Act, Senate Majority Leader Harry Reid (D-Nev.) announced Friday.”  (THE HILL, 10/21)

 

“The administration's $50 billion plan for highway, bridge, and rail upgrades to boost the economy went nowhere in 2010 when both the House of Representatives and Senate were controlled by Obama's fellow Democrats.  Washington already funnels $42 billion to states for transportation infrastructure upgrades as part of annual budgeting” (REUTERS, 10/21)

 

THE REPUBLICAN SOLUTION

 

The House Republican Plan for America’s Job Creators is focused on removing government obstacles to long-term economic growth—the kind of reforms needed to end the uncertainty facing small businesses and help create new private-sector jobs.  Demonstrating a willingness to work with the President to help put Americans back to work, House Republican leaders released a detailed memo September 16^th identifying which components of the plan offer potential to find common ground and which simply do not. House Republicans are committed to enacting measures that will support private-sector job creation and remain hopeful the President is willing to work with us in that effort. Learn more about the GOP plan and track the progress of House-passed jobs bills, at jobs.GOP.gov.