U.S. President Barack Obama is intensifying efforts to regain the political initiative on economic issues. He is prepared to announce a plan on Wednesday that would allow businesses to write off all capital investments until the end of next year.
This proposal is the latest in a series of ideas announced by Obama this week, aimed at demonstrating to voters before the November 2 congressional elections that he is taking decisive action to fix the economy.
However, even if these measures are approved by the U.S. Congress, they are unlikely to be enacted before the elections. The measures proposed by Obama also include extending the research and development tax credit and $50 billion in infrastructure spending.
Given that U.S. voters may use the election as an opportunity to vent their frustration over high unemployment and sluggish growth, the Democratic Party may lose its majority in the House of Representatives and potentially in the Senate as well.
An NBC/WSJ poll released on Tuesday showed that only 26% of Americans expect the economy to improve over the next year, down significantly from 47% a year ago.
The latest measure proposed by Obama would extend a tax incentive under which businesses were able to write off 50% of capital investments in 2008 and 2009.
“This measure will provide tax incentives when our economy needs them most, encouraging businesses to invest in the United States. It should help create jobs now while also expanding the capital stock to support future growth,” the White House stated.
This measure is equivalent to a $200 billion tax cut for businesses, but except for $30 billion, the remainder of the tax cuts will be recouped through higher taxes as businesses recover. The White House stated that this measure will benefit 1.5 million businesses.