New Deal: Business likes Obama plan

Big business is lining up to support President-elect Obama’s plan to
stimulate the economy with the biggest spending spree on roads, bridges
and other infrastructure projects since the Eisenhower administration.

Business
groups believe injecting funds into rebuilding America’s roads and
highways could put thousands back to work at a time of rising
unemployment. As a result, lobbyists from the U.S. Chamber of Commerce
and the National Association of Manufacturers (NAM) are asking
lawmakers and Obama’s transition team to funnel federal funds to
“shovel-ready” projects as the best way to stimulate the flagging
economy.

{mosads}“Our view is we need significant investments
in the nation’s infrastructure to meet the needs of the 21st century,”
said Aric Newhouse, NAM’s senior vice president of policy and
government relations.

“Most important to us is that
President-elect Obama is focused on putting money into real projects
that are ready to go,” said Janet Kavinoky, director of transportation
infrastructure at the Chamber.

Support from business groups
that generally are aligned with Republicans could help move Obama’s
stimulus legislation forward. House Minority Leader John Boehner
(R-Ohio) last week voiced opposition to public spending projects,
arguing that “now is not the time to make matters even worse by asking
taxpayers to pay for a slate of new government spending in the name of
‘economic stimulus.’ ” He argued for tax cuts to stimulate the economy.

Not every GOP-leaning business lobby is as excited about Obama’s plans.

Jade
West, senior vice president of government relations for the National
Association of Wholesalers-Distributors (NAW), said her trade group is
worried the massive spending — lawmakers have talked of spending $500
billion to $700 billion for Obama’s stimulus — could lead to
substantial tax hikes in years to come.

“There is no better
way to kill an economic recovery than to raise taxes, even by Congress
failing to extend the 2001 and 2003 cuts,” West said, referring to the
Bush tax cuts. NAWD has not taken a position on Obama’s stimulus
proposal.

At the same time, West said it’s possible the
public spending might be necessary to deal with a recession that some
economists say could be the worst in decades.

“It is an alarming amount of money, but we might need to spend that kind of money to kick-start the economy,” West said.

{mospagebreak}So
far, Obama has backed away from campaign pledges to repeal the Bush tax
cuts on the wealthiest Americans, although he and his advisers have
signaled that they would let the tax cuts expire in 2010. Many
economists believe raising taxes during a recession would hurt the
economy.

Obama also has backed away from pledges to impose
a tax on oil companies’ windfall profits as the price of oil has fallen
to below $50 a barrel.

Other business groups agree tax hikes could prolong the economic downturn.

“More taxes can slow down economic growth and put additional jobs at risk,” Newhouse said.

{mosads}Fears
that the massive spending could lead to future tax hikes aren’t
diminishing the Chamber’s or NAM’s support for infrastructure spending.
The Chamber will hold an all-day event Tuesday to highlight the need
for infrastructure spending. The conference features a number of
speakers from business, as well as Pennsylvania Gov. Ed Rendell (D) and
Sen. Mary Landrieu (D-La.).

Both groups have previously
called for public infrastructure spending. NAM President John Engler, a
former Republican governor of Michigan, offered support in
congressional testimony last month. The Chamber also chimed in with a
letter to lawmakers that said spending money quickly on near-term
transportation infrastructure projects would stimulate the economy.

At the same time, the business lobby is pressing for a series of specific tax cuts to accompany any spending.

They argue this will help employers avoid cutting workers as they struggle with the faltering economy.

The
National Federation of Independent Business (NFIB) is lobbying for
Obama to include a payroll tax holiday in the stimulus. Bill Rys,
NFIB’s tax counsel, says suspending the tax could increase spending and
reduce job losses.

“You can’t ignore the fact that the
weakness in the economy is with spending. If you remove the payroll
tax, that would give an incentive to spend again,” Rys said. “It puts
money back in the pockets on both sides of the economy.”

NAM
is also lobbying for a re-examination of corporate tax rates as well as
a reduction in taxes on income American companies earn abroad and
return to the U.S. “It creates a disincentive to move funds around the
world. If you need money here for capital investment, it makes it very
expensive to do so,” Newhouse said.

A number of trade
groups have begun assembling lists of infrastructure projects that are
“shovel-ready” once they are funded by the federal government. Work
could begin on them with little or no lag time.

For
example, the American Association of State Highway and Transportation
Officials has assembled a catalog of 5,000 projects across the country
that need about $64 billion in funds before they can be initiated.

“The stimulus is going to serve as a down payment on some of that backlog,” Kavinoky said.

The
market rallied Monday with the weekend news of Obama’s spending plans.
The Dow Jones Industrial Average finished nearly 300 points up at the
market’s close, as investors hoped the stimulus package would put
people to work and add to consumers’ coffers.

Obama promised
the huge investment one day after the Bureau of Labor Statistics
reported 533,000 jobs were lost in the month of November, the largest
monthly drop in employment since 1974.