The deal between President Obama and congressional Republican leaders to extend Bush-era tax cuts gives new life to some pending transportation-related measures and new stimulus to an ailing economy.
Transportation policy specialists in Washington said the “framework” agreement reached last week between the White House and GOP meant Congress soon could pass a bipartisan tax package that likely would include a raft of popular tax breaks for individual industries as well.
Many of those already are lumped together in a separate bill known as the “tax extenders” package. It includes some big-dollar financing measures such as a federally subsidized municipal bond program that was due to expire at the end of 2010.
Among other “extenders” are tax credits that expired a year earlier, including a break for small railroads that invest in track maintenance and upgrades. The benefits also include an expired per-gallon subsidy on biodiesel fuel favored by truck stop operators, many of which already spent money to install biodiesel infrastructure or face state government mandates to offer the fuel.
None of that was directly part of the pact the president unveiled Dec. 6, which centered on a two-year extension of income tax cuts from the past decade, some renewed features of the 2009 economic stimulus law and a 13-month extension of expiring unemployment insurance benefits.
That accord also contained two major new wrinkles to boost the economy in the near term: a one-year, 100 percent tax write-off of business investment in plant and equipment, along with a 2011 reduction in the Social Security payroll withholding tax for all workers.
The partial payroll tax holiday was expected to inject another $60 billion into the economy in the coming year compared with a mild tax stimulus measure it replaces, while the idea behind the business investment plank is to spur companies to put more money into buying equipment and other capital budget needs to try to increase the pace of factory orders.
With the plan offering lawmakers a legislative vehicle both parties could embrace, transportation specialists suddenly see hope for other measures to make headway. “As of now, it appears that the extenders package will be included in the overall compromise bill” on taxes, short line rail lobbyist Keith Hartwell said soon after the tax cut deal was announced.
The extenders might only renew those short line and biodiesel credits for this year, and leave future tax policy for those industries unsettled.
Even with the 100 percent investment credit proposed for 2011, the short lines’ separate credit “still provides a much larger incentive for railroad track improvements,” Hartwell said.
Others thought the pending tax accord made it more likely the Senate also would include at least a modified, one-year extension of the Build America Bonds subsidy, a heavily used program in the past 20 months to finance transportation construction as well as other public infrastructure projects.
Build America Bonds were launched under the 2009 stimulus law with a 35 percent federal subsidy for the interest cost. The Treasury Department said states, cities and other public entities issued $15.2 billion of those bonds just in November, more than $2 billion more than in any other month since the first bonds were issued in April 2009.
Contact John D. Boyd at firstname.lastname@example.org.