President Obama’s announcement yesterday of his administration’s job-creation plan added momentum to the push by municipal market participants for any forthcoming jobs bill to include infrastructure spending and aid to states.

The package could be paid for using $200 billion of leftover Troubled Asset Relief Program funds, Obama said during his speech at the Brookings Institution here.

Obama called for a package of tax cuts, energy-efficiency investments, and transportation and infrastructure funding that would be simpler in scope than the package Congress created for the American Recovery and Reinvestment Act in February. He delivered the remarks before the start of a congressional campaign season in which Democratic candidates are expected to be judged against double-digit unemployment numbers.

The president asked for new investment in highways, transit, rail, aviation, and water infrastructure. He said the package should include funding for merit-based projects such as those currently eligible for funding under the ARRA’s Transportation Investment Generating Economic Recovery program. That discretionary grant program has been oversubscribed by several orders of magnitude, in part because of its broad eligibility that includes several types of infrastructure.

“I recognize that by their nature these projects often take time, and will therefore create jobs over time,” Obama said. “But the need for jobs will also last beyond next year, and the benefits of these investments will last years beyond that.”

He said that a jobs bill “should also extend the relief in the recovery act, including ... relief to states and localities to prevent layoffs.” Economic analysts have recently said states may need $25 billion to $50 billion or more of additional federal help to recover from their own fiscal troubles, as tax revenues decline substantially.

The National League of Cities responded to the announcement with an additional call to “provide direct assistance to local governments to help save public-sector jobs and ensure a climate ripe for recovery and private-sector job creation.”

The support for infrastructure spending reassured transportation advocates who had worried that the president was pulling away from supporting a transportation-friendly jobs bill.

The American Association of State Highway and Transportation Officials and American Public Transportation Association applauded Obama’s proposal and said there are $85 billion worth of transportation and transit projects that could begin within 90 or 120 days of enactment of a jobs bill.

“Many states with severe budget crises are already signaling that they will have to scale back their regular transportation program since they don’t have the state matching funds needed to pay for projects,” AASHTO said.

Obama also called for Congress to extend unemployment insurance and health insurance for the unemployed, and to focus on small businesses. Incentives for small-business investment should include a one-year elimination of capital gains taxes, lowering that tax even more than the 75% exclusion that was included in the ARRA, he said.

House and Senate leaders were somewhat noncommittal yesterday in their responses to the speech, voicing their solidarity with the president but providing few details about what a jobs bill will contain.

Senate Majority Leader Harry Reid, D-Nev., said that Senate Democrats “reaffirm our commitment to keep job creation at the top of our list of legislative priorities.” House Speaker Nancy Pelosi, D-Calif., said Congress and the White House are “working together on a jobs package that achieves these goals and keeps our recovery on track,” including “putting Americans to work building a 21st century infrastructure.”

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