Obama Administration's Plan to Boost Business Spending

Strategic Insights -

President Barack Obama is expected to propose a plan to pump up to $200 billion into business spending, with a focus on equipment purchases and research and development. The plan aims to encourage businesses to spend their $1.8 trillion in corporate coffers and tap into the millions in bank capital waiting to be lent. A key component of the plan is a proposal to let businesses write off 100 percent of their spending on new equipment through 2011, as well as making the tax break for research and development permanent.

Key Takeaways:

  • The Obama administration plans to pump up to $200 billion into business spending, with a focus on equipment purchases and research and development.
  • The plan aims to encourage businesses to spend their $1.8 trillion in corporate coffers and tap into the millions in bank capital waiting to be lent.
  • The tax write-off for capital spending could matter a great deal in Michigan's manufacturing economy, where enormous amounts of capital investment are required to produce goods.
  • The industry spent more than $86 billion on R&D in 2008, making it one of the leading centers of R&D in all industries.
  • The permanent R&D tax credit could make high-paying U.S. research jobs competitive against sending work offshore to lower-cost countries.
  • Companies have delayed spending because of economic uncertainty, and the boost in demand from spending could prompt equipment manufacturers to hire more workers.
  • The plan includes an additional $50 billion in spending on infrastructure, which could further boost the economy.

Statistics:

  • The auto industry spent more than $86 billion on R&D in 2008.
  • The industry is one of the leading centers of R&D in all industries, even higher than computers and pharmaceuticals.
  • The tax write-off for capital spending could impact Michigan's manufacturing economy, which requires enormous amounts of capital investment.
  • Companies have delayed spending because of economic uncertainty, with $1.8 trillion in corporate coffers sitting idle.

Sources:

  • President Barack Obama's speech in Cleveland
  • Euclid Infotech Pvt. Ltd.
  • Contify.com
  • Michigan Manufacturers Association
  • Alliance of Automobile Manufacturers