Assemble the Fragments
A national transportation policy could help link some good fragments into a coherent plan.
The media love a good fight, and the Administration's latest budget satisfied their blood lust. But beneath the often bitter exchanges over bailouts and deficits lie some important indicators for U.S. businesses.
Opening the hearing before the Senate Finance Committee, Senator Max Baucus (D-MT) cited Congressional Budget Office numbers suggesting last year's Recovery Act created between 600,000 and 1.6 million jobs. He looked ahead to a job creation tax credit for small businesses, incentives to small businesses for investment in plants and equipment, and increasing small business lending through the Community Development Financial Institutions network. "We must also push to open new markets to U.S. exports," said Baucus.
Echoing some of the same hope for small business growth, Chuck Grassley (R-IA) warned against direct and indirect taxes and penalties that would result from the rising federal deficit and strike at small businesses. "Don't bury recovering small businesses with new taxes and penalties," he urged.
Treasury Secretary Timothy Geithner took his turn and promised to "extend Recovery Act business tax relief, and to create a new, temporary tax credit for job creation.
"All businesses will be eligible for a $5,000 tax credit for every new employee they hire in 2010," he continued. "An additional bonus amount will be available to firms that increase their payroll by adding hours or raising wages."
In addition, $30 billion from TARP will be available to "small and community banks," ostensibly to accomplish what the big banks did not do with bailout funds—namely, provide financing for small businesses to grow.
Then there are the infrastructure investments that were previously cited as job creators. But recent reports in states such as Michigan indicate cash-strapped state governments have struggled to find cash to qualify for federal matching funds on a number of infrastructure projects. At least in Michigan, many planned infrastructure projects will be canceled.
This adds up to the appearance of funding where the need is great. But in an environment of tight credit, will small businesses be able to qualify for loans to expand, then realize the hiring incentives? Michigan is looking at increasing fuel taxes to help fund those stalled projects, creating some of that burden in Senator Grassley's warning.
What we need, at least on the transportation infrastructure side, is a coherent, carefully constructed, and efficiently administered non-partisan national transportation policy, not a series of fragmented funding promises that can't deliver.
High-speed passenger rail systems, for instance, won't help small (or large) businesses increase exports and grow employment. They're political paybacks, and by definition they are good spending when they're in your district and wasteful if they're in someone else's. They don't build a strong core capability to support stated policy goals of tripling exports and creating long-term jobs.
Instead of promising to ride the first high-speed train from Tampa to Orlando, President Obama should promise to deliver the first paycheck to a new worker whose job in a small business was created as a result of increased exports.