President Barack Obama’s just-released $4 trillion budget includes a proposal for a six-year, $478-billion plan to invest in the nation’s infrastructure. The proposal also answers the main objection of critics who demand to know how it will be paid for: by closing a tax loophole that allows U.S. firms to avoid paying taxes on overseas profits, according to the White House.
The White House said the 14 percent tax would raise $238 billion which would be used to fund a broader $478 billion public works program of road, bridge and public transport upgrades. The remaining $240 billion for infrastructure investment would come from the federal Highway Trust Fund, which is financed by gas taxes.
“This transition tax would mean that companies have to pay U.S. tax right now on the $2 trillion they already have overseas, rather than being able to delay paying any U.S. tax indefinitely,” a White House official said. The official said that after this one-time tax, the 19 percent permanent tax firms would have to pay on overseas profits “would level the playing field, and encourage firms to create jobs here at home.”
National Stone, Sand and Gravel Association (NSSGA) President and CEO Michael W. Johnson praised the measure. “The aggregates industry welcomes the president’s proposal because it focuses much needed revenue to rebuild our nation’s crumbling infrastructure. While this approach avoids some of the political difficulties that many other measures face, it will be an uphill struggle to get it through Congress.”
Johnson said that NSSGA supports an “all of the above” approach to funding our nation’s infrastructure including an increase in the gas user fee as it is the simplest, fairest and most effective revenue raiser.
Obama, in an NBC interview before the Super Bowl, disputed a suggestion that he and the Republican-led Congress are so far apart that his budget proposals have no chance of winning approval.
“I think Republicans believe that we should be building our infrastructure,” Obama said. “The question is how do we pay for it? That’s a negotiation we should have.”
The president said he was putting forward good proposals but was willing to listen to ideas presented by Republicans as well.
Obama’s $478 billion public works program would provide upgrades for the nation’s highways, bridges and transit systems, in an effort to tap into bipartisan support for spending on badly needed repairs.
American Road & Transportation Builders Association President and CEO Pete Ruane also praised the proposal. “The President’s budget recognizes the obvious,” he said. “Status quo federal investment levels in America’s highways, bridges, and transit systems just won’t cut it anymore and isn’t a formula for strong economic growth.
“Passage of a robust, six-year transportation investment proposal as envisioned by the President would send the right signal to states planning new projects and to private sector companies contemplating whether to hire workers and make capital investment decisions,” Ruane said. “However, we shouldn’t put the horse before the cart. The most immediate challenge facing Congress and the President is reaching agreement on a sustainable revenue source to fix the beleaguered Highway Trust Fund before the next extension expires at the end of May. We urge them to check political expediency at the door and work together to quickly find a permanent funding solution for the nation’s transportation networks.”
Dennis Slater, president of the Association of Equipment Manufacturers, echoed the sentiments of Johnson and Ruane. “The equipment manufacturing industry is pleased to see the Obama administration offering a budget that contains more specificity around how they would fund critically needed improvements to the nation’s transportation infrastructure,” he said. “America’s continued economic growth demands that the Highway Trust Fund have a sustainable revenue stream that provides certainty and solvency for several years. AEM hopes President Obama’s budget will help to jump-start productive, bipartisan discussions as to how the United States can most effectively repair and revitalize the transportation system that is the lifeblood of its modern economy. And time is of the essence.”
Slater also said it is time for leaders in Congress and the administration to lay their cards on the table and begin intensive negotiations toward a long-term highway bill. “If there’s room for bipartisan cooperation, now is the moment to begin hammering through details,” he said. “That would give lawmakers time to explore sound funding options — like modestly adjusting the gas tax – if bipartisan, bicameral negotiations on alternatives falter.
Equipment manufacturers and the broader transportation community can’t afford more uncertainty; another short-term extension of the Highway Trust Fund at the end of May shouldn’t be an acceptable outcome,” Slater concluded. “If this Congress is able to come together to support American infrastructure, we need to find out sooner rather than later.”
Also weighing in on the proposal was The Portland Cement Association (PCA). The Association said it applauds President Obama for including substantial funding for the nation’s crumbling infrastructure in his 2016 proposed budget plan, and PCA has long supported a nationwide plan that would address highways and transportation structures, which are vital to the daily lives of the American public, it said in a statement. Key to taking on this large construction project is utilizing resilient construction techniques that assures the longest service life possible.
“It makes no sense to spend billions of dollars on infrastructure that needs to be repaired after less than 10 years when we know how to build sustainable, resilient structures that last for decades,” said James G. Toscas, president and chief executive officer of PCA. “With the improving economy, the demand on our transportation infrastructure will rise to new heights. We can’t continue with a ‘business-as-usual’ approach and allow one of our nation’s most important strategic assets to further degrade just when it’s needed most.”
PCA notes that nearly 71 percent of roads in the U.S. are graded fair to poor. While the numbers have remained stable year-to-year, there is a long-term down trend if proper investments in infrastructure are not made.