RSS Feed MenuPresident Obama is a brilliant man. He has many smart advisors. Quite often, however, they’ve had bad ideas. Yesterday, they proposed some good ones. For the sake of the country, Republicans should support the administration’s tax ideas and try to score political points by opposing the President’s infrastructure boondoggle proposals. Let’s review the facts.
The President’s first idea, a permanent R&D credit, won’t help the economy but will improve the honesty of the budget process. The credit, originally introduced in Ronald Reagan’s historic 1981 economic package, encourages private sector innovation and creates jobs. It has been renewed 14 times, has massive bipartisan support, and every president since its creation has advocated making it permanent. Congress has always demurred because keeping it as a “temporary” tax credit that “expires” provides a way to fudge budget projections for the future. Since the credit is here to stay in any case, simply keeping the country’s books in order mandates making it permanent.
Obama’s business expensing proposal—an idea taken directly from the Bush administration’s playbook—is also good policy. By letting businesses write off investments in physical capital immediately, it promises to accelerate spending and, unlike slow moving, infrastructure expenditures, will (by definition) truly fund the most “shovel ready” projects. It also makes sense.
Republicans wanting to score political points, however, shouldn’t count themselves out of luck. The administration has proposed lots of new infrastructure pork along with the tax policy changes. Given that so many stimulus infrastructure funds remain unspent, shoveling more money into infrastructure will have next-to-no consequence for economic growth but will run up the already-too-large deficit. Making a stand against the infrastructure plan while simultaneously endorsing the president’s tax policy proposals would make it clear that Republicans stand for principle and good policy. Simply obstructing them will show that Republicans do not know or care about the business of actually governing.
Rabiner // Sep 8, 2010 at 1:38 pm
So why is infrastructure bad and tax credits for private capital investments good? Why aren’t they BOTH good? One is private capital investment and one is public capital investment. I mean I can say ‘private capital boondoggles’ and then make that sound bad too without articulating why its bad? Slow moving or not, ever expert I’ve read about in the past has said specifically we have a deteriorating infrastructure that will cost trillions to update so why don’t we start planning that now?
Oldskool // Sep 8, 2010 at 2:19 pm
As rabiner said one idea is as reasonable as the other. But I’m confident (R)s will oppose both. There’s an election ahead and then there’s another one two years from now, and so on and so on. And when your party’s purpose is electioneering as opposed to governing, your options are limited.
balconesfault // Sep 8, 2010 at 2:35 pm
Republicans wanting to score political points, however, shouldn’t count themselves out of luck. The administration has proposed lots of new infrastructure pork along with the tax policy changes. Given that so many stimulus infrastructure funds remain unspent, shoveling more money into infrastructure will have next-to-no consequence for economic growth but will run up the already-too-large deficit.
I’m confused – how do you run up the deficit if you don’t actually spend the money?
sinz54 // Sep 8, 2010 at 6:00 pm
Rabiner: So why is infrastructure bad and tax credits for private capital investments good?
Because you’re not going to build any infrastructure in time to ease us out of our current 9.6% unemployment rate. It may be a good long-term investment–but Obama is lying through his teeth if he claims it’s a jobs program to help the currently unemployed.
As I’ve said before:
This ain’t the 1930s, when we built the Empire State Building in 2 years. Today, it would take 15 years–9 years of court cases and EPA rulings and environmental impact statements and public hearings and NIMBY, followed by 6 years of construction made lengthy by the need for noise abatement and pollution control and worker safety.
How do I know? Go google the Cape Wind project, a windmill farm for my state of MA–and what a fiasco that turned into. Or look at how slowly the rebuilding of Ground Zero in NYC is taking. Find out why. Find out why building infrastructure today is nothing like it was 100 years ago.
But don’t take my word for it:
Jonathan Alter is a liberal. He wrote an otherwise favorable book on President Obama, “The Promise.” But on page 85, Alter says this about the 2009 stimulus package:
The biggest frustration involved infrastructure. Obama said later that he learned that “one of the biggest lies in government is the idea of ’shovel-ready’ projects.” It turned out that only about $20 billion to $40 billion in construction contracts were truly ready to go. The rest were tied up in the endless contracting delays and bureaucratic hassles associated with building anything in America.
“One of the biggest lies in government is the idea of ’shovel-ready’ projects.”
Remember that line.
easton // Sep 8, 2010 at 6:05 pm
balconesfault, there is only about $144 billion of the Stimulus left unspent, with a lot of it in already dedicated projects. Is Eli really claiming our national infrastructure is completely up to date and mondernized? That is ridiculous to think so. Right now interest rates are at an all time low, if you are going to borrow, now is the time, even if the projects will be completed a few years down the road.
Just look at what the projects are specifically, if some are wasteful pork barrel projects, write them out. But criticize things specifically, don’t say the national infrastructure can take it on the chin for a few more years.
In China I saw new subway lines being built at record pace, even today in the midst of a global recession. They need to be built, waiting for more properous times would be a disaster in lost productivity time that fast, efficient subways can bring to city dwellers.
The New York Subway system, otoh, is an outdated wreck compared to these other systems. Some of the wiring and pipes are approaching 100 years old. The wastage exceeds that of the cost to repair them, but no one gets the money together to revamp it all, it is all ad hoc.
Oldskool // Sep 8, 2010 at 6:21 pm
you’re not going to build any infrastructure in time to ease us out of our current 9.6% unemployment rate.It’s also not going to be passed before the election and probably not after it either. And everyone knows it. He’s framing the debate and daring (R)s to argue against it and they’ve already obliged.
balconesfault // Sep 8, 2010 at 7:45 pm
The New York Subway system, otoh, is an outdated wreck compared to these other systems. Some of the wiring and pipes are approaching 100 years old. The wastage exceeds that of the cost to repair them, but no one gets the money together to revamp it all, it is all ad hoc.
And as a NEPA expert, I can assure you that almost all repairs to the NY Subway system, even if Federally Funded, can be completed under Categorical Exemptions that require less than a months worth of processing to release the funds.