Obama seeks massive tax break for business

Companies could save $200 billion by writing off capital investment. The president also announces a $50-billion spending plan for roads, runways and railroads.

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It is unclear whether Congress will have the appetite for another major spending bill. Congressional Democrats have spent much of this campaign season defending themselves against Republican charges of wasteful and unnecessary spending that ballooned the deficit and delivered few results.

Polls have shown that the stimulus spending package passed last year has not been popular, particularly with independent and fiscally conservative voters.

Rep. Adam Smith (D-Wash.) applauded Obama’s infrastructure proposal, as well as a plan to extend research and development tax credits, but was circumspect in assessing the initiatives’ chances of being approved by Congress.

“In both instances, we’re going to see how they’re paid for and plugged into the economic mix,” Smith said. He also said it was unrealistic to expect either initiative to have a significant short-term effect on the economy or job market.

The $50-billion plan amounts to slightly more than what was allocated to highway, rail and other transportation projects in last year’s $814-billion stimulus package. Critics derided some of those projects as wasteful, and others, including many in the construction industry, complained about delays at the state level in getting projects approved and launched.

Even so, private economists have estimated that the recovery act overall boosted employment by more than 3 million jobs. And analysts say there’s little question that government spending on infrastructure can give a shot in the arm to the economy, generating a hefty amount of jobs for an industry that desperately needs them.

Construction employment is down nearly 2 million from late 2007, accounting for about a quarter of the nation’s job losses over the recession.

Ken Simonson, chief economist at Associated General Contractors, a trade group, said Monday that $50 billion in government transportation spending could yield 1 million jobs or more — half in construction and related manufacturing and services, such as architectural and engineering, and the other half in supporting businesses.

“Investment in infrastructure has been a very effective form of stimulus,” he said of last year’s recovery act. “It’s kept a lot more construction workers on the job than had it not passed.”

Few experts are hopeful about the administration’s chances of making a significant improvement in the short term.

“There’s nothing that can be done to make a material difference before the elections in November,” said Jim Kessler, vice president for policy at Third Way, a moderate Democratic think tank in Washington.

Still, Kessler viewed Obama’s new measures as an important political move. “He has to show he’s focused like a laser beam on the economy and that he has a plan for getting the country moving toward economic growth.”

kathleen.hennessey@latimes.com

don.lee@latimes.com

Peter Nicholas of the Tribune Washington Bureau contributed to this report.

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