Obama Said to Announce Transportation Infrastructure Plan

President Barack Obama today will propose a six-year plan to rehabilitate the nation’s transportation infrastructure with an initial $50 billion to help spur an economy that’s lost jobs for three straight months.

Obama will announce the program to fix the nation’s roads, railways and runways to union families at a Labor Day rally in Milwaukee scheduled for 3:10 p.m. New York time, the White House said in a statement.

Two months before congressional midterm elections, Obama will call for the formation of an “infrastructure bank” and request money to rebuild 150,000 miles (241,400 kilometers) of roads, construct and maintain 4,000 miles of rail, and overhaul 150 miles of runways, the statement said.

“This plan would build on the investments we have already made under the Recovery Act, create jobs for American workers to strengthen our economy now, and increase our nation’s growth and productivity,” according to the statement.

The Obama administration will work with Congress to ensure the plan is fully funded, and a “significant portion of the new investments would be front-loaded in the first year,” according to the statement.

The program will focus on the long-term modernization of transportation systems and create jobs starting in 2011, an administration official said today. The White House will propose to pay for the new spending by eliminating tax deductions for oil and gas companies, the official said.

Photographer: Andrew Harrer/Bloomberg

Obama plan to rehabilitate the nation’s transportation infrastructure. Close

Obama plan to rehabilitate the nation’s transportation infrastructure.

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Photographer: Andrew Harrer/Bloomberg

Obama plan to rehabilitate the nation’s transportation infrastructure.

Republican Skeptics

Republican economists questioned whether rushing out more money for rebuilding roads and other such spending was the best way to help the economy rebound.

“Infrastructure programs are always popular for stimulus talk but disappointing in practice,” Douglas Holtz-Eakin, president of the American Action Forum and a former adviser to the 2008 presidential campaign of Senator John McCain, a Republican from Arizona. “There is a role for efficient infrastructure in such a strategy but it is not a ‘put people to work fast’ tool.”

The House Appropriations Committee’s transportation panel in July rejected Obama’s request for $4 billion to create an infrastructure bank to finance new projects.

Holtz-Eakin also questioned whether Congress would be willing to approve more spending, given signs that indicate growing voter opposition to a widening federal budget deficit that the Congressional Budget Office estimates will reach $1.3 trillion this year.

‘Politics’

“It is safe to conclude that the ratio of politics to substance in this effort is infinite,” Holtz-Eakin said.

Today’s remarks to members of the AFL-CIO, the largest U.S. labor federation, kick off a week in which Obama promote his economic agenda in two Midwest states where incumbent Democrats are in close contests.

Faced with the prospect of Democrats losing control of Congress in the November elections and a series of mixed economic reports, Obama will offer proposals that combine tax breaks and additional spending to help an economy that’s struggling to recover from the worst recession in more than six decades.

Last week’s jobs report showed that private payrolls climbed 67,000 in August, more than forecast, easing concerns that the world’s largest economy is sliding back into a recession. Even so, overall employment fell by 54,000 the unemployment rate rose to 9.6 percent from 9.5 percent as more people entered the labor force.

Job Losses

Construction jobs in the U.S. have declined by 940,000 since Obama took office in January 2009, even after a 19,000 gain in August.

Peoria, Illinois-based Caterpillar Inc., the world’s largest construction equipment maker, said last month it may add as many as 9,000 workers worldwide this year as sales climb in developing markets. Caterpillar shares have risen almost 50 percent in the past year.

Later this week, the president will also urge Congress to permanently extend and expand a research-and-development tax credit for businesses, according to two administration officials. The plan, which he’ll announce in Cleveland Sept. 8, would cost about $100 billion over a decade.

Every president since Bill Clinton has backed a permanent extension of the research tax credit, which Congress only temporarily extends because of its high cost.

Legislative Calendar

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 the next day. Lawmakers will be at work for about three weeks before leaving again to campaign.

The economic stimulus package approved last year allocated $38.6 billion for the Transportation Department and so far $18.5 billion has been paid out, according to a government website that tracks the spending.

The Milwaukee trip is Obama’s third visit to Wisconsin since June. The state’s unemployment rate, at 7.8 percent, is lower than the national average, even with pockets of greater economic stress, such as in the southern part of the state, where a General Motors Co. assembly plant closed in 2008.

To contact the reporter on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.net Lisa Lerer in Washington at llerer@bloomberg.net

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