Tag: Milken Institute

More Details, Such as They Are, on President’s Infrastructure Plan

We looked for background material this morning to accompany the President’s speech at the AFL-CIO’s Laborfest in Milwaukee, where he announced and briefly discussed a proposal to spend $50 billion on infrastructure. There’s a little, here and there.

A transcript of the President’s speech is here.

There’s a two-and-a-half page summary sheet, available via a blog post by the vice president’s economic adviser, Jared Bernstein, entitled, “Let’s Stop Torturing Facts and Start Working Together.” (How’s that for extending hand of cooperation?)

Excerpt from fact sheet:

This plan would build on the investments we have already made under the Recovery Act, create jobs for American workers to strengthen our economy now, and increase our nation’s growth and productivity in the future. At the same time, the plan would reform the way America currently invests in transportation, changing our focus to enhancing competition, innovation, performance, and real analysis that gets taxpayers the best bang for the buck, while moving away from the earmarks and formula debates of the past. In prior years, transportation infrastructure was an issue that both parties worked on together, and the Administration hopes the same can be true now.

Some of the tangible accomplishments of the President’s plan over the next six years include:

  • ROADS: Rebuild 150,000 miles of roads – renewing our commitment to the backbone of our transportation system;
  • RAILWAYS: Construct and maintain 4,000 miles of rail – enough to go coast-to-coast;
  • RUNWAYS: Rehabilitate or reconstruct 150 miles of runway – while putting in place a NextGen system that will reduce travel time and delays.

Note to White House writers: Prolepsis notwithstanding, it’s not a “tangible accomplishment” until it actually happens.

At the Department of Transportation’s website, we don’t find any additional information on the President’s proposal. (Searched at 7:37 a.m., Tuesday.) There’s a Distracted Driving Summit coming up, through.

Senior White House advisers on Monday briefed reporters on the proposal. From Politico, “President Obama unveils $50 billion road, rail plan“:

Senior administration officials, in a conference call with reporters Monday morning, would not say whether they would push Congress to pass a bill before the end of 2010.

“These types of reauthorizations have always been a substantial undertaking,” one official said. “This one is particularly ambitious because of the front loading and the set of reforms.”

Under the best-case scenario, however, jobs would be created in 2011, the official said. “This is not an … immediate jobs plan. This is a six-year reauthorization that’s front-loaded,” according to the senior administration official. “We’re not trying to put out an idea today that in October 2010 will be creating jobs.”

Oh. But the surface transportation authorization expired on Sept. 30, 2009. As the National Governors Association summarized:

Comprehensive federal laws and regulations that guide national surface transportation policies and programs expired in September 2009. While the American Recovery and Reinvestment Act (P.L. 111-5) provided one-time funding for highway and transit infrastructure spending, Congress has not passed a long-term authorization.

The National Association of Manufacturers regards investment in infrastructure as a central responsibility of the federal government and a competitive imperative, as covered in our NAM ManuFact. The economic value of investing  in infrastructure was a central thrust of the Milken Institute study the NAM released in January, 2010, “Jobs for America: Investments and policies for economic growth and competitiveness,” and the NAM prominently cites the need for infrastructure investment in our policy guide and call to action, “Manufacturing Strategy for Jobs and a Competitive America.”

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At the Milken Institute Global Conference

UPDATE (5 p.m.) We originally had a post here about Mike Campbell, President and CEO of Arch Chemicals and chairman of the National Association of Manufacturers’s board of directors, speaking Tuesday at the 2010 Milken Institute Global Conference, participating in a panel, “U.S. Overview: Main Street Waits for Its Rally.”

Unfortunately, Mike has had to cancel because of illness. The program and entire conference remain full of good information and policy discussions. See below…
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Secretary Gates on Export Controls

Reuters, “U.S., citing security, to revamp export controls“:

(Reuters) – Defense Secretary Robert Gates announced plans on Tuesday to overhaul Cold War-era export controls, saying confusing and excessive U.S. rules undermined national security, the defense industry and ties with allies.

Bloomberg, U.S. to Consolidate Export-Controls to Boost Trade, Gates Says”:

April 20 (Bloomberg) — The Obama administration will push Congress to simplify and consolidate controls on exports of U.S. goods with potential military applications into one government agency to boost trade, Defense Secretary Robert Gates said.

Two good quotes of many from Gates:

  • “The United States is thought to have one of the most stringent export regimes in the world. But stringent is not the same as effective.”
  • “Multinational companies can move production offshore, eroding our defense industrial base, undermining our control regimes in the process, not to mention losing American jobs.”

Reporters cite the NAM’s study from the Milken Institute, “Jobs for America,” on export controls that estimates modernizing export controls on commercially available technology products could boost exports by 1.9 percent (or $56.6 billion), and increase 340,000 jobs by 2019.

Also, from DOD, “DoDLive Bloggers Roundtable: U.S. Export Control System”:

Secretary Robert Gates will be giving a significant speech today at 1:30 PM EDT to the Business Executives for National Security on reforming the U.S. export control system.  At 4 p.m. EDT, we will hold a DoDLive Bloggers Roundtable with the Mr. James A. Hursch, director, Defense Technology Security Administration, who will provide details on DoD’s position on export controls.

Listen live to the roundtable.

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Tax Extenders, Mostly Good

Washington Post, “Senate passes $140 billion in tax breaks, aid to unemployed“:

Beyond those provisions, the bill carries renewals of several expired tax credits, including those for research and development, biodiesel, energy-efficient home improvements, and the deduction of state and local sales taxes. Those extensions helped attract the support of Republicans and the praise of business groups.

Dorothy Coleman, vice president of tax and domestic economic policy for the National Association of Manufacturers, said the research-and-development credit extension will be a particularly effective job creator. “Going ahead and acting on these [tax extensions] gives companies some certainty” about how they can spend money in the future, she said.

NAM President John Engler also issued a statement in support of the Senate action, with some exceptions. Excerpt:

The NAM’s “Jobs for America” report finds that by increasing the R&D credit and making it permanent, we would encourage innovation and boost total employment by hundreds of thousands of jobs this decade. Similarly, by providing additional time for companies to make required pension payments, the retirement security provisions will put cash back in the hand of employers, allowing them to grow and create jobs. We are also pleased the Senate bill broadens the tax credit for energy efficient windows, doors and skylights by allowing them to meet the 2010 Energy Star standards. And, we welcome the provision that will allow companies to use their unused Alternative Minimum Tax (AMT) credits based on hiring workers or making investments.

While we are pleased that the tax extenders and retirement provisions are included in the Senate-passed bill, we are disappointed that it also includes industry-specific taxes that will pile more costs on manufacturers and make them less competitive. We will continue to work with members of Congress to improve this critical bill so that it can foster job creation and global competitiveness without putting undue burdens on specific industries. It is important for lawmakers to remember throughout this jobs debate that government doesn’t create jobs, business does.

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Jobs Bill? Better to Correct the Excessive Corporate Tax Rate

The Senate voted to invoke quorum on H.R. 2847, the Jobs for Main Street Act, on Monday by a vote of 62-30.

If the one-time tax credits for hiring accomplish anything it’s, uh, Jobs for Main Street!

Which is to say that a temporary, small credit for hiring an employee will hardly change an employer’s behavior, other than to perhaps prompt the filing of a form to qualify for the credit after the hiring of a worker who would have been hired in any case.

Congress should think about the big picture, beyond the 2010 elections. As the Tax Foundation concludes in a new special report, “The Importance of Tax Deferral and A Lower Corporate Tax Rate“:

Key Findings
• The United States is the only large economy that taxes corporate income worldwide with a tax rate exceeding 30 percent.
• During 2009, both Great Britain and Japan enacted territorial systems, giving their multinationals a major tax advantage over U.S.-based firms that are saddled with a worldwide system. Over 80 percent of developed nations now have territorial systems.
• Whether the U.S. moves to strengthen its worldwide system by repealing deferral or follows the international trend by adopting a territorial system, there will be unfortunate incentives created. In both cases, though, lowering our corporate tax rate will mitigate them.
• A reasonable upper-bound target might be a combined federal-state rate of roughly 25 percent, implying a federal corporate tax rate of roughly 20 percent.

These findings reinforce the NAM’s new economic analysis conducted by the Milken Institute, “Jobs for America,” which examined the U.S. corporate tax rate:

Reducing the U.S. corporate income tax rate to match the OECD average would trigger new growth. By 2019, it could boost real GDP by $375.5 billion (2.2 percent), create an additional 350,000 manufacturing jobs, and increase total employment by 2.13 million.

Two million jobs, eh? That’s a lot more than any temporary employment credit will ever achieve.

See also our NAM news release, “Manufacturers Disappointed with Senate Jobs Bill; Bill Doesn’t Go Far Enough to Create Jobs

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Taxes

From the Heritage Foundation’s budget expert, Brian Riedl, an analysis of President Obama’s FY2011 budget, “Obama’s Budget Seeks $2 Trillion More in Spending and Deficits Than Last Year.” Riedl highlights the unprecedented deficit spending, but in discussing economic growth, the immediate concern should be the tax increases.

President Obama bases nearly all of his (modest) deficit reduction on tax increases. Although no economic theory justifies raising taxes during a recession, he would impose nearly $1 trillion in tax hikes for 3.2 million upper-income families and small businesses. He would eliminate tax breaks for charitable giving and the mortgage interest deduction for millions of Americans.

President Obama has endorsed a cap-and-trade bill that would cost more than $800 billion over the next decade. He has also endorsed substantial tax hikes to finance health care reform. All told, tax increases would exceed $2 trillion, yet they are still not enough to prevent a $1 trillion annual deficit by 2020.

In imposing these new taxes, the Obama Administration would damage the global competitiveness of U.S. manufacturers and other businesses.  A report by the Tax Foundation documents that U.S. competitors are going in the opposition direction, reducing corporate taxes to promote growth, “OECD Nations Continue Cutting Corporate Tax Rates While U.S. Stands Still (Federal Plus Provincial/State Corporate Tax Rates for OECD Countries, 2008-2009).

Less competitive = fewer sales = stagnation = fewer employees. So much for JOBS!

The recent analysis by the Milken Institute, “Jobs for America,” concludes that reducing the U.S. corporate income tax rate to match the OECD average would trigger new growth. By 2019, it could boost real GDP by $375.5 billion (2.2 percent), create an additional 350,000 manufacturing jobs, and increase total employment by 2.13 million.

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Here and There, the NAM

From Bloomberg’s economic roundup story, “Recovery Accelerates as Company Spending Rises Most Since 2006“:

In his Jan. 27 State of the Union address, the president proposed extending through 2010 a temporary tax incentive that encourages businesses to accelerate purchases of equipment. The 50 percent write-off may give a boost to capital expenditures if approved by Congress.

“It will help companies to make capital investments, which is what you need in a weak economy,” Monica McGuire, senior policy director of taxation for the National Association of Manufacturers in Washington, said in a telephone interview.

Slack remains in the economy. About 68.6 percent of U.S. manufacturing capacity was in use in December, compared with an average of 81 percent since records began in 1948.

Major tax increases may counter the effect of the accelerated depreciation, however.

From Barron’s, “Girding for ‘Son of Stimulus’“:

Ironically, while Congress clashes over the proper proportions for the new stimulus, a growing numbers of interest groups are urging the president to throw caution to the wind and take far bolder action. A study prepared by the Milken Institute at the behest of the National Association of Manufacturers recommends $426 billion in new infrastructure projects over the next three years to create close to 11 million jobs. The same study recommends a lower corporate-tax rate and lifting some export controls on technology, moves that it estimates would create another three million jobs. The cost of these would amount to $43 billion. The thinking is that taxes paid by new hires would help defray the costs.

The study Jim McTague is referring to is “Jobs for America.”

The Hill, “Business wants U.S. action on China as tensions grow

In November, China announced it would establish a national catalog of products that are to receive significant preference in government procurement decisions. To be registered, products must contain intellectual property that is developed and owned in China.

In a Jan. 26 letter, 19 U.S. trade associations labeled those rules “an unprecedented use of domestic intellectual property as a market-access condition” that makes it impossible for U.S. products to qualify unless they establish Chinese brands and transfer their research and development of new products to China.

The NAM is one of the trade associations that joined the letter.

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Tax Credit for Hiring: It’s Not Even That Good of Politics

From USA TODAY, “$5,000 tax credit for each new job a big part of Obama’s plan,” reporting on the President’s State of the Union reaffirmation of a campaign pledge, “I’m also proposing a new small business tax credit — one that will go to over one million small businesses who hire new workers or raise wages.”

There’s only one problem: Business groups say the credit won’t do much to boost hiring.

“I really don’t think it’s going to be much of an incentive,” says Bill Rys, tax counsel for the National Federation of Independent Business. “Mostly it is going to be used by businesses that would have been hiring anyway.”

The National Association of Manufacturers is promoting its own job-creation package, featuring a cut in corporate income tax rates and a more generous tax credit for research and development. The group considers those changes more important than the $5,000 tax credit.

“For those manufacturers who are looking to hire, this will help,” says spokeswoman Erin Streeter. “We don’t anticipate this tax credit being a reason for them to hire. Our members are going to hire if there is a long-term need.”

Erin is referring to the NAM’s new Milken Institute study, “Jobs for America.”

Very few people take the tax credit for hiring seriously as anything other than politics.

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On CNBC, the Best Policies for Creating Jobs

NAM’s President John Engler and SEIU’s Andy Stern appeared on CBNC before the President’s State of the Union speech Wednesday. Engler used the NAM’s new report from the Milken Institute, “Jobs for America,” to describe a growth agenda that embraces a more competitive tax structure — lower corporate tax rates and a permanent R&D tax credit — export control reforms, and major investments in infrastructure categories like energy, transportation and communications.

The 10 minute clip is here.

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NAM’s John Engler on the Hugh Hewitt Show: Jobs! Jobs! Jobs!

John Engler, president of the National Association of Manufacturers, appeared on Hugh Hewitt’s radio program Tuesday to discuss “Jobs for America,” the new Milken Institute study that details the economic case for policies that will encourage competitiveness and growth of the U.S. manufacturing sector.

The program has posted a transcript of the interviewtranscripts being one of the reasons we really like Hugh’s site, www.hughhewitt.com –and here’s an exchange.

HH: Now it’s a great report. It’s almost forty pages long, full of facts, full of details. What’s the key takeaway, Governor? I mean, people should go read it at the Milken Institute website, and I’m sure NAM’s got a link to it, too.

JE: We do, both Milken and NAM have links to this. We’re sending it all over Washington today to every member of Congress, to anybody that we think can influence Congress.

But bottom line, of course, it recognizes I think something your show knows well. Government doesn’t create jobs. Business creates the jobs, and we need to encourage that to happen.

And the report, I think, does something that we’ve needed to do for some time, and I’m just pleased that the NAM could have engaged the Milken Institute to get this done. We really go into the numbers. We dive deeply and say look, if you reduce corporate tax rates, if you make the R & D credit better, make it permanent, if you modernize our system of export controls, guess what’s going to happen? You’re going to create jobs, if we do all three of those things, nearly a million new manufacturing jobs, and nearly three million total jobs right there. And we’re going to add significantly to GDP. This is over a ten year period.

But the implications of this are very clear for Congress. What we need to do is encourage this investment, and get the private sector working. That’s how we get the economy moving.

Thanks, Hugh.

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