By Kent Hoover
For many businesses, Christmas may come in January, when Congress is expected to pass an economic stimulus package containing billions of dollars in new spending and tax breaks.
Construction companies could benefit from massive investment in roads, bridges and other infrastructure projects.
High-tech companies stand to gain from expansion of broadband services to rural areas, purchases of new computers for classrooms and nationwide integration of electronic medical records.
Environmental efficiency specialists could find lots of work retrofitting government buildings and schools.
State governments could receive help paying their bills, especially for unemployment insurance and Medicaid.
And tax cuts could put more money in the hands of consumers and businesses.
If all this sounds expensive, it is. The stimulus package could cost up to $1 trillion over the next two years.
With so much money at stake, business groups and other special interests are lobbying hard to be included.
‘Shovel-ready’ projects await
President-elect Barack Obama has promised “the single largest new investment in our national infrastructure since the federal highway system was created in the 1950s.”
This could be a boon to the construction industry, which has shed more than 770,000 jobs over the past two years. State and local officials have identified up to $73 billion in ready-to-go infrastructure projects that have gone through planning and approval.
Federal funding of these projects “will immediately employ people, support small businesses and stimulate Main Street economies,” said Miami Mayor Manny Diaz, president of the U.S. Conference of Mayors.
“Investing immediately in shovel-ready projects – whether roads or rails, broadband, energy or water – will create jobs and strengthen America’s competitiveness,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce.
The types of projects funded also are important. Repairs and maintenance of existing infrastructure not only are needed, but these labor-intensive projects also create more jobs than building new facilities, according to Building America’s Future, a coalition representing state and local officials.
Congress should establish clear criteria for infrastructure projects to “make sure the investments are smart and strategic,” said Polly Trottenberg, the coalition’s executive director.
“We want to make sure there are no bridges to nowhere,” she said.
The Reason Foundation, however, contends it found plenty of pork in the infrastructure list compiled by the U.S. Conference of Mayors, including dog parks, sports complexes and cultural centers. A surge in infrastructure spending would lead to “thousands of tennis centers to nowhere,” wrote Robert Poole, the libertarian foundation’s founder.
The infrastructure piece of the stimulus package also could lead to a fight pitting business against labor.
Associated Builders and Contractors, a trade association representing nonunion construction companies, urged Obama to oppose any efforts to require that federally funded construction projects be built by union labor.
More than 85 percent of the construction workforce is not unionized, ABC noted in its letter to Obama.
“Denying those firms and their millions of employees the right to work on publicly funded projects is not good business or good budget sense, and certainly not what our nation needs at this time of economic turmoil,” the group wrote.
Payroll tax holiday proposed
The stimulus package also could include tax cuts.
The National Federation of Independent Business has proposed a six-month holiday from the 6.2 percent tax that employers and employees pay for Social Security.
“No other stimulus provision will be as immediate and as effective as the payroll tax holiday in getting money in the hands of both employers and employees who are struggling to make ends meet,” said Dan Danner, executive vice president of NFIB.
The National Retail Federation also supports a payroll tax holiday or some other direct tax relief for consumers. Consumer spending accounts for about 70 percent of the economy, it noted.
“We don’t see how recovery can be achieved without something that benefits the consumer and thereby boosts consumer spending,” NRF Vice President J. Craig Shearman said.
The National Association of Home Builders, meanwhile, reports that builder confidence in the market for new single-family homes remained at a record low in December.
It wants Congress to increase the $7,500 tax credit for first-time home buyers and make it available at the time of closing, which would make it easier to use as a down payment.
It also wants the federal government to buy down mortgage rates.
“Congress and the administration must step in with substantial incentives to bring qualified buyers back to the table as well as effective foreclosure relief programs if we are to end this negative spiral,” said NAHB Chairman Sandy Dunn, a homebuilder from Point Pleasant, W.Va.
As the U.S. lost 533,000 jobs in November, a few industries bore the largest share of those losses.
- Employment services: 101,000 jobs
- Retail trade: 91,000 jobs
- Manufacturing: 85,000 jobs
- Construction: 82,000 jobs
- Leisure/hospitality: 76,000 jobs
Source: Bureau of Labor Statistics