US infrastructure plan aims to cut number of jobless

US PRESIDENT Barack Obama has unveiled a plan to spend $50 billion building roads, railways and airport runways next year in an effort to show he is tackling the US’s chronic unemployment problem ahead of the November mid-term elections.

But the president’s plan is almost certain to fail to win congressional approval, with many Democrats unwilling to support new spending and Republicans loath to give the administration legislative victories before the November 2nd vote.

The economy is chief among voters’ concerns and, while they criticise Mr Obama for failing to focus sufficiently on jobs, polls show voters also balk at extra spending that resembles a second stimulus package.

Speaking at a Labor Day union picnic in Milwaukee, Wisconsin, Mr Obama outlined plans for 150,000 miles of roads and 4,000 miles of rail to be built in the next six years, and 150 miles of runway rehabilitated or reconstructed.

It would also put in place a new air traffic control system.

The plan would “create jobs for American workers to strengthen our economy now, and increase our nation’s growth and productivity in the future”, the White House said. However, it could not say how many jobs the plan would create, only that it would be “substantial”.

The package is in addition to the investments under the Recovery Act stimulus package, and would require $50 billion funding in the first year, an administration official said, declining to put a figure on overall plans.

The first year’s investment would be funded over 10 years by closing tax loopholes – specifically a manufacturing tax deduction and depreciation allowances – for oil and gas companies.

Mr Obama also urged congress to enact a six-year reauthorisation that would allow for more sustainable infrastructure investment.

The $862 billion Recovery Act package has already allocated funds for repairing roads and building high-speed rail, an effort the administration says has helped save or create three million jobs during the downturn.

Such claims are failing to placate voters, with the unemployment rate at 9.6 per cent and the latest Gallup poll putting underemployment at 18.6 per cent.

With less than two months until the mid-terms, and Republicans poised to take control of the house and perhaps the senate, Mr Obama is struggling to show his administration has done enough on the economy.

But analysts warn that it is too late to do anything that would register before the election. “The most he can hope to do is to convey something that at least, in principle, could have an impact,” said Dean Baker, of the Centre for Economic and Policy Research. – Copyright The Financial Times Limited 2010