The two major pieces of Mr. Obama’s package — expanding and making permanent a popular credit for businesses’ research and experimentation expenses, and allowing them to write off the full value of new equipment purchases immediately in 2011, have longstanding Republican and corporate support.
From the text of today’s speech,
I’m proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in America. And I’m proposing that all American businesses should be allowed to write off all the investment they do in 2011. This will help small businesses upgrade their plants and equipment, and will encourage large corporations to get off the sidelines and start putting their profits to work in places like Cleveland and Toledo and Dayton.
These are in addition to the $50 billion infrastructure proposal the President unveiled on Labor Day. Eric Lotke has more on that in Obama’s Infrastructure Proposal: A Step Forward.
The infrastructure proposal, the R&D tax break and the accelerated capital investment write-offs are a positive approach as the stimulus winds down, but are not enough. Tax breaks might trigger a bit of activity but really, businesses want customers — especially smaller businesses that are not profitable enough to take advantage of tax breaks. And compared to actually investing in infrastructure tax breaks are spending that just leaves behind debt.
What about an industrial policy that will empower workers, keep jobs in this country, and not be blanket tax cuts for millionaires? This is what has been lacking in this country for decades. Other countries have industrial policies, and follow long-term strategies to bring industries to them. They line all the ducks up, from education policies to local infrastructure, to supply chains, to regulatory environments to trade strategies, and use those as a package to lure the entire industry. We don’t, and that’s why we are losing out.