The Details of Obama's $50 Billion Infrastructure Plan

Over Labor Day weekend, President Obama announced his plan for a new infrastructure reform plan. It is expected to cost around $50 billion and with the economy continuing to struggle Obama has pitched the proposal as a job creation package. However, many experts have suggested that it might have the opposite effect. The full contents of the plan have not yet been released. However, based on the information currently available, I have put together the following article so we may all become familiar with the President’s new stimulus plan.

Obama's Announcement

At “Laborfest” in Milwaukee the President Obama first announced his proposal for the $50 billion infrastructure plan. He specifically called the plan a "permanent policy change" rather than a quick fix for a big problem.

“We used to have the best infrastructure in the world and we can have it again,” Obama announced. “We want to change the way Washington spends your tax dollars; we want to reform the way we fund and maintain our infrastructure to focus less on wasteful earmarks and outdated formulas, and we want competition and innovation that gives us the best bang for the buck."

Roads, Railroads and Job Creation

The main idea behind this infrastructure plan is to do what its name implies: build and repair infrastructure. Obama’s plan aims to build 150,000 miles of new road, 4,000 miles of railroad, and 150 miles of runway. It would also work on establishing a next generation air traffic control system. Director of Transportation of America, James Corless, has come out in strong support of the plan. He said the American Society of Civil Engineers regularly gives our country's infrastructure "grades that parents would punish their children for bringing home."

Although many members of Congress agree that our infrastructure needs improvement, many disagree with the President’s new proposal. John Mica, the ranking Republican on the House Transportation and Infrastructure Committee, has already spoken out against Obama’s plan. He asserts that nearly two-thirds of the money allocated for infrastructure projects in the American Recovery and Reinvestment Act of 2009 have still not yet been spent. Mica has suggested working with the White House on a plan to use this money, and also warns that members of Congress are likely to be dubious about a massive spending bill this close to the November elections.

Job Creation

The main selling point of Obama’s proposal is the jobs it would create. However, economists are unsure about the number of new jobs the plan would actually generate. Goldman Sachs economist Jan Hatzius has claimed the proposal "could be helpful,” but is “unlikely to have a large effect on growth." The White House itself has even admitted that the plan would do little to create any jobs until later in 2011. There are also concerns that some tax changes to fund the bill would have a negative affect on the unemployment problem in the country.

Funding Options

Although it will be Congresses job to decide how to fund the legislation, President Obama has suggested closing tax loopholes to pay for the proposal. Specifically, they would like to eliminate the manufacturing tax deduction, and the depletion allowance for oil and gas companies. It is unclear at this point if these proposed changes would cover the full cost of the legislation or not.

Effect on Businesses

While the plan pushes job creation, some opponents believe it could negatively affect businesses, and cause additional job losses. Economists worry that closing certain business tax loopholes could lower revenue, and force some businesses to cut back on expenses, or lay off workers. However, supporters of Obama’s plan explain that highway spending is scheduled to decrease by 5% in the next year, and the infrastructure proposal would both save, and create thousands of construction jobs.

National Infrastructure Bank

As Obama announced, his plan aims to reform the way the federal government handles infrastructure projects. As such, he has proposed creating the National Infrastructure Bank to manage the new infrastructure spending. The new federally regulated bank would evaluate potential infrastructure projects, and decide which are the most significant and useful to our country and economy. Unfortunately, taxpayers have been very weary of banks and financial institutions since the bailouts of 2008 and this is likely going to be the most difficult part to sell to the American public.

Senate Takes Up 'Job Killing' IRS Rule

The Senate is back in session this week after returning from recess, and the members have a lot of hotly debated issues to vote on. They are scheduled to decide on expiring tax cuts, and the health care law that would require small businesses to file more forms.

CNNMoney.com reports:

Lawmakers return to Capitol Hill this week after the summer recess and small business tops their to-do list.

Their goal: Help small business, and boost the economy. The Senate will consider two proposals right off the bat.

The broader measure is the Small Business Jobs Act, which includes a $30 billion fund to spur lending and $12 billion worth of tax breaks. The Senate will also decide whether to repeal a law enacted as part of health care reform that will require small businesses to file millions of new tax forms -- a provision a top Republican calls "job killing."

Main Street needs the help: Credit remains hard to come by, and without it hiring is suffering. In fact, small business hiring has been on a downward slide for the past two and a half years.

And both the number of small business loans and the total value of those loans have declined, according to data from the FDIC. The number of loans has dropped by 17.8% since the second quarter of 2008 and the total value of those loans plunged by $60 billion to $650 billion.

Read more here

Do Unemployment Checks Keep the Jobless at Home?

From CNNMoney.com:

Does allowing the jobless to get nearly two-years of unemployment checks give them an incentive to not work?

When Congress debated whether to extend unemployment to a record 99 weeks, some Republicans said that the unemployed are staying home collecting benefits when they could otherwise be working.

"[An unemployment extension] doesn't create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work," Jon Kyl, R-Ariz., argued during Senate debate in March.

And with the current extended benefits due to expire soon after November's mid-term elections, that argument seem to be gaining some traction.

The extension of benefits "is almost surely the culprit" behind sky-high unemployment, argued Robert Barro, Harvard University economics professor, in a recent Wall Street Journal column.

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The Tax Hike Nobody's Talking About

The media has placed a lot of attention on a few minor tax changes, such as the new tanning tax. However, little focus has been put on a major tax hike that is about to occur. Unless Congress takes immediate action, the Marking Work Pay credit is due to expire; if it does expire, working taxpayers across the country will have more money withheld from their paychecks.

The credit, introduced last year as part of the government's stimulus package, boosts paychecks by up to $400 for single filers and up to $800 for joint filers, by reducing the amount of tax withheld from each paycheck.

But unlike those cuts, which were largely viewed as a benefit for wealthier Americans, the Making Work Pay credit is designed exclusively as a middle-class benefit, and will affect a wider base of taxpayers.

Continue reading at CNN.com…

More Women Taking On Second Job

Families across the country are struggling to keep up with mounting bills, while still managing to keep food on the table. As this article from ABC News explains, 27 million Americans are working second jobs to make ends meet, and a record number of women are taking on extra work as well.

For Marie Benoit-Wilcox, a second, freelance job is matter-of-fact, and gets started even before her "day job" begins. Benoit-Wilcox, a perinatal system coordinator at St. Luke's Hospital in Manhattan and mother of two teenagers, has been supplementing her income for over a decade selling Avon cosmetics. Each morning when she wakes shortly after 4 a.m., she spends an hour at her Irvington, N.J., home working on client lists and going over orders before commuting to the hospital.

"Saturdays are my all-day-Avon day," she says. "And Sunday I hope I've got time with my family, maybe see a concert or have a party with the kids."

It may seem like a time crunch, but the success she's seen over the past decade make it all worth it. The moonlighting money has enabled her to give her children private educations, a college fund and a family cruise to the Caribbean.

Benoit-Wilcox began her second career as a sales rep after her mother, also involved with Avon, became ill in 1999. "I wanted to be able to keep buying the products, so the only solution was selling myself!" she jokes. She has been with the company for 11 years, including three consecutive years of soaring success--moving a benchmark 112,000 units of Avon product--and sees only great things in the future, for both her business and her family.

Continue reading at ABC News.Go.com…

Wanted: 400,000 truck drivers

It is well known that unemployment is still at an all time high in our country. The problem is nationwide and each individual state is looking for ways to get their residents back into the job force. Businesses are doing their part too—in Sacramento, California where I am located, 1500 people showed up to apply for limited employment positions at the local Campbell’s Soup Factory. While I love that businesses are trying to be a solution to the unemployment problem, it is just unfortunate that there are way too many people who are unemployed and this number outweighs the available job opportunities. This morning, I came across an industry that is calling out to the employed.

According to CNN Money, the U.S. trucking industry will need to hire about 200,000 drivers by the end of this year, and will need to add another 200,000 by the end of 2011, according to the Council of Supply Chain Management Professionals. Overall the industry lost almost 150,000 driving jobs since the start of 2008.

Rosalyn Wilson, the author of the report that was sponsored by Penske Logistics, states that the forecasts is for only a 4% to 6% growth in freight traffic for trucks this year and next, which Wilson says is a conservative estimate. Typically freight grows by about 10% coming out of a recession, she said.

I find it very interesting to know that freight grows by such high percentages after a recession—Read more here and tweet me your thoughts.

www.twitter.com/ronideutch

Three Steps for Making Even Better Decisions on the Job

Last week, The Glass Hammer.com, posted a great new article by Dr. Sylvia Lafair, on three steps for making better decisions at work. I have included a section of their article below, but be sure to read the full version at The Glass Hammer.com.

1. OBSERVE: Each of us has a knee jerk manner of deciding. Pay attention to the way you seek out information and analyze data. Keep a check list to figure out your primary mode of asking for input. Do you prefer consensus or contentious? How you handle conflict is a key determiner for how you make decisions. Are you, as management guru Peter Drucker insists, able to do the right thing even if it is unpopular? Notice if you act quickly just to get “it” over with and done, or wring your hands, afraid you could be wrong. Here is a quick litmus test to help: notice your behavior when shopping for an outfit. Do you shop alone, with friends? When a sales person wants to be helpful are you grateful or is it grating? And now, for the best part; once you bring your new sartorial success home is it a done deal or are you a master of the return syndrome?

2. UNDERSTAND: We all, and that means all of us, learned decision making methods in our original organization, the family. This is where responses to decisions were applauded or the adults in our lives were appalled. Once you begin to understand the emotional underbelly of decisions you are in a better place to use a combination of logic and intuition; decisions are less gut wrenching and more satisfying. Look back at early choices, often this was in the area of friends; were they accepted or rejected? Note who judged and how you responded. Who was there to give you advice when you took a wrong turn and “messed up”? Were you able to be honest at home or did you “lie by omission”? What was the price to pay if you wanted something expensive, or frivolous?

Continue reading at The Glass Hammer.com…

Bill Seeks to End Some Furloughs for California Workers

From MercuryNews.com:

California would end three-day-a-month furloughs for tens of thousands of state employees under a jobs bill that is scheduled for its first committee hearing this week.

The targeted employees would be those who work for agencies that collect taxes or receive their revenue from sources other than the state's general fund, such as the Department of Motor Vehicles.

Republicans have been critical of the Democratic proposal, saying it does not go far enough to create private-sector jobs.

The bill's sponsor, Senate President Pro Tem Darrell Steinberg, D-Sacramento, said allowing certain workers to return to their jobs full-time will actually generate more revenue for the state and improve customer service.

He said furloughing workers at the Franchise Tax Board is costing the state more than $300 million a year in uncollected taxes. His bill would exempt the tax board and the Board of Equalization, which is fighting the furloughs in court.

The state loses $7 in tax board collections for every $1 it saves by furloughing workers there, the Senate Office of Oversight and Outcomes calculated in a report released Friday.

"All it's doing is keeping our economy down," Steinberg spokesman Nathan Barankin said.

Steinberg's bill also would exempt other agencies that receive at least 95 percent of their budgets from federal money or fees, which are not tied to the general fund.

Senate Democrats Unveil Jobs Package with Tax Breaks to Entice GOP

According to the Boston Globe, Democratic leaders in the Senate are hoping to round up support from Republican Senators for their job bill by including a series of tax breaks. Congress is hoping to get a final bill to the President’s desk before Congress breaks for the holiday weekend. However, since the 350+ page bill has not been officially released, many conservative Senators are waiting to announce their support for the legislation.

The draft has very few new ideas for creating jobs, other than a $10 billion plan to exempt companies from paying their share of Social Security payroll taxes for new hires who had been unemployed for at least 60 days this year.

The idea, by Senator Chuck Schumer, Democrat of New York, and Senator Orrin G. Hatch, Republican of Utah, is regarded as more workable than Obama’s plan for tax credits of up to $5,000 for new hires because it is simpler and gets the tax breaks to businesses faster.

The rest of the measure contains mostly last year’s unfinished business, including renewal of business tax breaks that have expired, an extension of unemployment benefits and health insurance subsidies, and a delay in a cut in Medicare payments for doctors.

Jobs Bill Likely to Be Delayed in Senate

Although the Obama administration is hoping to sign the job create bill into law before the end of this week, yesterday Senate Republicans denounced the efforts of Democrats to pass the lengthy legislation in a hurry. It is now reported that the Senate will need to wait until at least the week of February 22^nd to vote on the $80 billion job creation package.

"It's a cake that isn't quite baked yet," said Senate Minority Whip Jon Kyl (R., Ariz.), following a Senate nominations vote.

"Not enough of our members have had an opportunity to review it, for a consensus that would permit us to move forward on it that quickly," he added.

Senate Majority Leader Harry Reid (D., Nev.), had announced earlier Tuesday that despite another snowstorm rolling through the Washington region, he hoped to bring the jobs-creation bill for a vote by the end of the week.

Both the Senate and the House are in recess the week of Feb. 15 due to the Presidents' Day holiday.

Democratic leaders were still weighing procedural options late Tuesday. But with 15 senators absent from Tuesday's vote because the weekend snowstorm impeded their travel, it didn't appear that Democrats had the numbers to limit debate and push the bill to a vote without Republicans on their side.

Continue reading at the Wall Street Journal…

Jobs Legislation to Be Introduced in Senate Today

From Bloomberg.com:

Senate Democrats said they will push for passage this week of a U.S. job-creation plan that includes a $20 billion extension of the federal highway and transportation construction program.

Majority Leader Harry Reid said the package he plans to introduce today has “some good” bipartisan support. “I don’t know of any sticking points at this stage,” he said.

Reid spoke after Democratic and Republican congressional leaders met with President Barack Obama to discuss ways to move forward on a jobs bill and other priorities. Lawmakers in Washington are under growing pressure to boost the economy before this year’s midterm elections.

California Democratic Senator Barbara Boxer said the package to be introduced today will include the extension of the highway trust fund for bridge and road construction, which is financed by a federal gasoline excise tax. Extending the highway construction program until year’s end would create 1 million new jobs, she said.

Before the meeting with congressional leaders, Obama said a jobs package is “a good place to start” on bipartisan cooperation in Congress.

“My hope is that both in the House and the Senate we’ll see some packages moving over the next several weeks that can provide a jump-start to hiring and start lowering the unemployment rate,” the president said.

Senate Republican leader Mitch McConnell of Kentucky told reporters after the meeting, “There’s a chance the Senate could get there with a small package” for creating jobs.

Hiring Tax Credit Will Not Create Long-Term Jobs

According to this new report from the Heritage Foundation, the temporary tax credit President Obama proposed will not create sustainable jobs needed for long-term recovery. They commend Congress and Obama for trying to help workers who have lost their job, but suggest extending the 2001 and 2003 tax credits instead.

The credit proposed by President Obama pays $5,000 for each new hire a business makes in 2010. Businesses would also get refunds on their Social Security taxes if they increase wages or expand hours for existing-workers. The credit would be capped at $500,000 per business.

Congress tried a similar credit in the 1970s. It failed to create jobs, however, because much like today, policymakers ignored the jobs the credit would destroy since it had to be funded by government borrowing. Therefore, the current proposal must be evaluated by its net job creation--a standard that requires looking at the jobs created by the credit and the jobs lost because the government has to finance the proposal.

On the positive side, according to the Congressional Budget Office (CBO), the credit would create five to nine years of full time employment for every million dollars of credits businesses take. The White House estimates that the credit will reduce tax revenue by $33 billion. Combining these two estimates shows that before offsetting effects, the credit might create between 165,000 and 297,000 jobs in 2010. This works out to a cost of $111,000 to $200,000 per job created.

Continued at Heritage.org…

U.S. Job Satisfaction Hits 22-Year Low

From CNNMoney.com:

Fewer than half of U.S. workers are satisfied with their jobs, the lowest level since record-keeping began 22 years ago, said a report released Tuesday.

The Conference Board's survey polled 5,000 households, and found that only 45% were satisfied in their jobs. That's down from 61.1% in 1987, the first year the survey was conducted.

Even though one in 10 Americans is out of a job, those who are employed are increasingly dissatisfied.

"Through both economic boom and bust during the past two decades, our job satisfaction numbers have shown a consistent downward trend," said Lynn Franco, director of the Consumer Research Center of The Conference Board, in a prepared statement.

"[That] could spell trouble for the overall engagement of U.S. employees and ultimately employee productivity," she added.

The report notes that job satisfaction has steadily declined over the years despite big improvements in the work environment, such as a reduction of workplace hazards and an increase in vacation days.

The drop in satisfaction over the past 22 years spans various aspects of employee life, including interest in work (down 18.9 percentage points) and job security (down 17.5 percentage points).

And employee satisfaction dipped across the board; workers in every age group and income levels showed a drop, but workers younger than 25 were the most unhappy in their jobs.

Almost one-quarter of respondents said they didn't expect to be at their current jobs within a year.

Taxing Stock Trades to Pay for Jobs

Job creation is still a hot topic amongst lawmakers, as legislators are desperate for a way to lower the ever-increasing unemployment rate. One of the methods proposed by Democrats in Congress is to create a new stock market tax to pay for job creation. The move could generate the Federal government between $120 billion and $240, but is already facing strong opposition. Check out the following article on the new tax from CNN Money.com.

By levying a small fee when stocks, futures, swaps, options and other securities are bought and sold, supporters of the tax believe the government can take in between $120 billion and $240 billion annually. That money could be used to fund additional government stimulus to help put the nearly 16 million unemployed Americans to work.

"Financial transactions number in the many trillions of dollars every year, so if you take a small fraction of that, you are going to be raising a lot of money," said Ann Lee, economics professor at New York University. "That can be used for things like paying down debt or creating jobs."

But the idea faces staunch opposition among Republicans and even from some Democratic lawmakers. Treasury Secretary Tim Geithner has also voiced his disapproval of the idea.

There are handful of different proposals in play, and the first bill surfaced in mid-November from a group of seven House Democrats, led by Rep. Peter DeFazio, D-Ore. The legislation is called "Let Wall Street Pay for the Restoration of Main Street Act."

The bill, which is still in the draft stages, would tax each stock transaction at 0.25% and futures, swaps and credit-default swaps at 0.02%. The bill's sponsors estimate that it can raise about $150 billion per year, half of which could be set aside in a "job creation reserve" for Congress to allocate in the future.

White House Reports 1 Million Jobs Saved, Created

A new report from White House’s top economists was published this morning and claims that over 1 million jobs have been saved or created by the Obama administration. The economists also said, however that the estimates must "be regarded as preliminary and understood to be subject to considerable uncertainty."

President Barack Obama has promised that his $787 billion stimulus plan will create or save 3.5 million jobs by the end of next year. But the economy has fared worse than the White House predicted when it pitched the jobs plan and officials have sought to beat back criticism that the results did not justify the huge combination of tax cuts, state aid and government spending.

In its first report to Congress on the stimulus, the White House Council on Economic Advisers said Thursday that the economy would have been far worse without the stimulus.

The report attributes the million job figure to the stimulus and other policy actions but says the driving force behind the job creation is the stimulus. Economists cautioned, however, that the estimates must "be regarded as preliminary and understood to be subject to considerable uncertainty."

The report is certain to draw criticism because the U.S. economy has actually lost about 2.5 million jobs since the stimulus was signed in February. Because the White House number is based on economic models, it's impossible to say for certain what that number would have been without the stimulus.

In Bleak Times, the I.R.S. Looks Good

From NYTimes.com:

Benjamin Franklin said that nothing in this world is certain except death and taxes. When death is not an option and the world is maximizing the uncertainty, taxes look like an intriguing career alternative.

Or, more precisely, what the Internal Revenue Service calls tax administration.

The I.R.S. dangled the possibilities when it held an open house at the federal office building at 290 Broadway in Lower Manhattan on Tuesday. An hour before the fair was scheduled to begin, the crowd began lining up — recently laid-off Wall Street types in charcoal-gray pinstripe suits and trench coats; less formally dressed people; a woman with a new accounting degree on her résumé and a 14-month-old baby in a stroller.

Before their face-to-face encounters with I.R.S. employees, before they got a chance to hear about the agency’s “work-life balance” and its portable retirement plan, they had to do some waiting. The line for the career fair stretched along Broadway, turned the corner, ran down Reade Street and turned the corner again at Elk Street.

Once the job seekers reached the lobby, they had to shed their umbrellas and rain gear. Following security guards’ instructions, they also had to remove shoes, belts and watches, and step through a metal detector.

Hope was an elevator ride away, on the 30th floor, where tables had been set up with handouts describing the particulars of different I.R.S. units. Employees of the agency were waiting to talk about their own careers but were not there to offer jobs on the spot. Most prospective applicants said they were told to go home and search a Web site — www.jobs.irs.gov — for positions they might be qualified for, and to apply online.

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Unemployment Rate has Record Increase in May

According to a new article on CNN money, the unemployment rate increased from 5% to 5.5% in May. This represents the highest increase since 1986, and another sign of the looming economic recession. To read the full article, click here, or enjoy the excerpt below.

"A spike in the unemployment rate - the biggest in more than two decades - raised new concerns Friday that a weak labor outlook, high oil prices and continuing woes in the housing and credit markets are leading the U.S. economy into a painful recession.

The government said Friday that the unemployment rate soared to 5.5% in May from 5% in April - much higher than economists had forecast.

The surge marked the biggest one-month jump in unemployment since February 1986, and the 5.5% rate is the highest level seen since October 2004. Unemployment is now a full percentage point higher than it was a year ago.

‘You're not going to have a lot of people arguing "no recession" with this data,’ said Lakshman Achuthan, managing director of the Economic Cycle Research Institute. The prolonged job loss and jump in unemployment are better indicators that the economy is in a downturn than is the traditional thumbnail rule of two quarters of falling gross domestic product, he said.

The jobs report came on the same day that oil prices soared to $134 as the dollar lost value against the euro and the yen. It also comes the day after the Mortgage Bankers Association reported that homes in foreclosure crossed the 1 million mark during the first quarter, a record high."