Will President Obama’s Jobs Plan Help Manufacturing?
Washington is finally starting to focus on ways to create jobs, but the question remains whether the recent obsession with deficits will continue to stand in the way of constructive bipartisan dialogue. Last week before a joint-session of Congress, President Obama outlined the basics of his $447 billion American Jobs Act. Meanwhile, the so-called “super committee” is already at work looking for ways to reduce the deficit while hopefully stimulating economic growth with targeted tax incentives for hiring, investments in infrastructure, and other actions.
American voters spoke clearly over the summer months, pleading with their members of Congress to place more emphasis on job creation and to stop bickering about budget deficits. In fact, according to recent AAM polling, two-thirds of voters would rather see Congress creating jobs. Here’s a look at some items that have been discussed in recent days that would potentially benefit American manufacturing companies and their workers. As you will see, many of these items fared well among likely voters.
Infrastructure Investment. The President has proposed immediate investments in infrastructure and a National Infrastructure Bank to help modernize our crumbling roads, rail, airports, locks and dams, and other infrastructure. Congress should immediately enact a robust, multi-year reauthorization for transportation infrastructure projects and advance other creative ways to leverage private sector investment through an infrastructure bank. The President and Congress should include language to ensure that U.S.-made goods are used to the fullest extent possible when tax dollars are being used to build infrastructure. Adding a Buy America preference to all infrastructure investment creates more jobs – 33% more according to researchers at the University of Massachusetts in 2009. It makes no sense to spend billions of dollars only to see jobs created abroad.
• 89% support investing “more in rebuilding and repairing bridges, roads, and other basic infrastructure.”
• 90% support Buy American policies “to ensure that taxpayer funded government projects use only U.S.-made goods and supplies wherever possible.”
Tax Incentives for Investment. The President has proposed extending a tax provision through 2012 that allows companies of all sizes to immediately deduct the cost of new investments in plant and equipment. In June, the New York Times reported that “businesses’ spending on employees has grown 2 percent as equipment and software spending has swelled 26 percent” since the start of the recession. This leads us to ask whether there improvements to be made to ensure that the benefit is shared by workers.
• 90% support tax incentives for companies that “invest in new equipment and plants for manufacturing.”
The package will soon be sent to Congress where modifications will likely be made. We have a few suggestions – as outlined in a recent piece by Alliance for American Manufacturing (AAM) executive director Scott Paul – that would help to rebalance our economy and provide a level playing field for American workers.
Tax Reform. Reshape the tax code in a revenue neutral way to provide incentives for job creation and inward investment. R&D tax credits should help firms that not only innovate in America but also make their products here. Lower tax rates for manufacturing activity in America and eliminate tax shelters for hedge funds or financial transactions that have no real value.
• 94% support a tax benefit for companies that conduct R&D in the U.S. and make their new products here.
Skills/Training. Shift some education investment to rebuilding our vocational and technical skills program, which would address looming shortages in the manufacturing sector.
• 91% support increasing investment in “retraining and education programs to ensure workers gain the tools they need to compete in modern, high-tech factories – up 4% from 2010.
Trade Enforcement. Refocus the trade agenda by giving American businesses new tools to counter China's currency manipulation, industrial subsidies, intellectual property theft and barriers to market access.
• 95% favor keeping “America’s trade laws strong and strictly enforced to provide a level playing field for our workers and businesses.”
• 59% say we need to “get tough with China and use every possible means to stop their unfair trade practices…” – only 34% say we need to “be careful…because they own such a significant portion of our debt.”
• 86% say we should penalize nations like China that manipulate exchange rates and implement trade barriers to gain an unfair trade advantage.
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