Obama May Seek Permanent R&D Credit in Economic Proposals
U.S. President Barack Obama
Brendan Smialowski/Bloomberg
U.S. President Barack Obama called for making the business tax break permanent during his presidential campaign and has requested its permanent extension in both budgets he introduced since taking office.
U.S. President Barack Obama called for making the business tax break permanent during his presidential campaign and has requested its permanent extension in both budgets he introduced since taking office. Photographer: Brendan Smialowski/Bloomberg
Sept. 3 (Bloomberg) -- U.S. Representative Mike Pence of Indiana, the House's third-ranking Republican, discusses the August U.S. jobs report released today and the prospects of extending Bush-era tax cuts. Pence talks with Peter Cook on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)
Sept. 3 (Bloomberg) -- Dean Baker, co-director of the Center for Economic and Policy Research, talks about the outlook for the U.S. unemployment rate. Baker, speaking with Deirdre Bolton and Peter Cook on Bloomberg Television's "InsideTrack," also discusses potential measures to stimulate economic growth. (Source: Bloomberg)
Economic Stimulus Package
Brian Branch Price/Bloomberg
Workers extend an overpass on the New Jersey Turnpike in Bordentown, New Jersey, U.S. Build America Bonds were created by last year's federal economic stimulus package to help state and local governments lower borrowing costs for public works.
Workers extend an overpass on the New Jersey Turnpike in Bordentown, New Jersey, U.S. Build America Bonds were created by last year's federal economic stimulus package to help state and local governments lower borrowing costs for public works. Photographer: Brian Branch Price/Bloomberg
President Barack Obama may include a permanent extension of the research and development tax credit among the tax breaks for businesses he is contemplating to spur job growth, two congressional aides said.
The White House also has been considering payroll tax relief to encourage new hiring, more tax breaks for small businesses and new infrastructure spending, according to people familiar with the discussions who spoke on condition of anonymity because the discussions are preliminary.
Obama’s spokesman, Robert Gibbs, said no decisions have been made. The administration’s economic team is reviewing “targeted” measures to boost economic growth and hiring that won’t be at the same scale as the $814 billion stimulus legislation approved last year, he said yesterday. A permanent extension of the research and development tax credit would cost $70.5 billion over the next 10 years, according to the president’s 2011 budget proposal.
“Some big new stimulus plan is not in the offing,” Gibbs said. “I do not anticipate something that rivals the extraordinary measures that the president has already taken.”
A government report today showed overall employment fell 54,000 for a second month and the unemployment rate rose from 9.5 percent to 9.6 percent in August.
Less than two months before Congressional mid-term elections, administration officials are working to balance new stimulus measures against their own projections of a budget deficit that will hit a record $1.47 trillion this year and $1.42 trillion in 2011.
Poll Numbers
Polls show voters are increasingly skeptical of Obama’s handling of the economy following the worst recession in more than 70 years. Republicans, who are seeking to gain majorities in the House and Senate in November elections, have criticized last year’s stimulus as ineffective.
Whatever measure Obama eventually proposes, he’ll be running up against the calendar and election-year politics. The Senate is scheduled to return to Washington Sept. 13 and the House the next day. Lawmakers will be at work for about three weeks before leaving again to campaign.
The administration will have a difficult time “coming up with something that’s not dead on arrival” in Congress, said Chad Stone, who was chief economist at the Council of Economic Advisers during the Clinton administration. “That’s a really serious problem.”
Support for Credit
The research and development tax credit has a history of support in Congress and has frequently been renewed since it was first adopted in 1981. The tax break expired at the end of 2009, though the House already has passed legislation to extend it for another year, and Senate leaders are seeking to take up the bill before the midterm elections. Companies including Dow Chemical Co., Microsoft Corp. and CA Inc. have supported the renewal.
Obama called for making the business tax break permanent during his presidential campaign and has requested its permanent extension in both budgets he introduced since taking office. Former Presidents George W. Bush and Bill Clinton took the same stance when they were in office.
Lawmakers expect Obama to again urge Congress to make the credit permanent as part of a plans to give the economy an additional boost, according to the congressional aides, who spoke on condition of anonymity because none of the proposals have been formally offered.
“The options under consideration build on measures the president has previously proposed,” Jen Psaki, an administration spokeswoman, said. “The president and his team are discussing several options, as they have been for months, and no final decisions have been made.”
Events on Economy
Obama will travel to Milwaukee on Sept. 6 and Cleveland Sept. 8 to discuss the economy and hold a news conference on Sept. 10 at the White House, the administration announced yesterday. Obama’s last solo White House news conference was May 27 to answer questions about the Gulf of Mexico oil spill.
In addition to the measures under consideration, the president is pushing Congress to pass legislation to provide tax breaks and steps to free up credit for small businesses. The bill passed the House and was blocked by Republicans in the Senate.
“The only surefire ways for policy makers to substantially increase aggregate demand in the short run are for the government to spend more and tax less,” Christina Romer, the departing White House chief economist, said in a speech in Washington Sept. 1. “We should be moving forward on both fronts.”
To contact the reporters on this story: Mike Dorning in Washington at mdorning@bloomberg.net; Julianna Goldman in Washington at jgoldman6@bloomberg.net
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