Over Labor Day weekend, President Obama announced his plan for a new infrastructure reform plan. It is expected to cost around $50 billion and with the economy continuing to struggle Obama has pitched the proposal as a job creation package. However, many experts have suggested that it might have the opposite effect.

Roads, Railroads and Job Creation

The main idea behind this infrastructure plan is to do what its name implies: build and repair infrastructure. Obama's plan aims to build 150,000 miles of new road, 4,000 miles of railroad, and 150 miles of runway. It would also work on establishing a next generation air traffic control system. Director of Transportation of America, James Corless, has come out in strong support of the plan. He said the American Society of Civil Engineers regularly gives our country's infrastructure "grades that parents would punish their children for bringing home."

Although many members of Congress agree that our infrastructure needs improvement, many disagree with the President's new proposal. John Mica, the ranking Republican on the House Transportation and Infrastructure Committee, has already spoken out against Obama's plan. He asserts that nearly two-thirds of the money allocated for infrastructure projects in the American Recovery and Reinvestment Act of 2009 have still not yet been spent. Mica has suggested working with the White House on a plan to use this money, and also warns that members of Congress are likely to be dubious about a massive spending bill this close to the November elections.

Job Creation

The main selling point of Obama's proposal is the jobs it would create. However, economists are unsure about the number of new jobs the plan would actually generate. Goldman Sachs economist Jan Hatzius has claimed the proposal "could be helpful," but is "unlikely to have a large effect on growth." The White House itself has even admitted that the plan would do little to create any jobs until later in 2011. There are also concerns that some tax changes to fund the bill would have a negative affect on the unemployment problem in the country.

Funding Options

Although it will be Congresses job to decide how to fund the legislation, President Obama has suggested closing tax loopholes to pay for the proposal. Specifically, they would like to eliminate the manufacturing tax deduction, and the depletion allowance for oil and gas companies. It is unclear at this point if these proposed changes would cover the full cost of the legislation or not.

Effect on Businesses

While the plan pushes job creation, some opponents believe it could negatively affect businesses, and cause additional job losses. Economists worry that closing certain business tax loopholes could lower revenue, and force some businesses to cut back on expenses, or lay off workers. However, supporters of Obama's plan explain that highway spending is scheduled to decrease by 5% in the next year, and the infrastructure proposal would both save, and create thousands of construction jobs.

National Infrastructure Bank

As Obama announced, his plan aims to reform the way the federal government handles infrastructure projects. As such, he has proposed creating the National Infrastructure Bank to manage the new infrastructure spending. The new federally regulated bank would evaluate potential infrastructure projects, and decide which are the most significant and useful to our country and economy. Unfortunately, taxpayers have been very weary of banks and financial institutions since the bailouts of 2008 and this is likely going to be the most difficult part to sell to the American public.