NEW YORK The White Houses recently unveiled budget was met with skepticism by steel interests, who say the plan's proposed infrastructure spending and tax increases are likely to be a mixed bag for the industry.
Two particular measures in President Obamas budget proposalinfrastructure spending and changes in the tax codewould have a direct effect on the steel industry, sources said. Although the budget calls for $50 billion in infrastructure spending, which likely would increase steel demand, there are fears that the White Houses intent to raise $580 billion in taxes could hurt manufacturing.
"While there are several positive items in the budget, our concern is with the $580-billion tax increase, which is going to hurt our competitiveness," Steel Manufacturers Association president Thomas Danjczek told AMM. "What we need and what we can do better is a more pro-job-creation, more pro-growth budget than a budget that does not promote economic recovery."
The proposed budget would provide fewer tax deductions for higher-income Americans. It also would close such business tax loopholes as oil and gas tax breaks, according to the budget proposal released April 10.
"Provisions to eliminate fossil fuel tax preferences like percentage depletion and intangible drilling costs are important to the steel industry and many of our suppliers and customers, and their elimination could trigger a negative economic impact," American Iron and Steel Institute (AISI) president and chief executive officer Thomas J. Gibson said in a statement.
Obamas budget would provide $50 billion for infrastructure investments, $40 billion of which would be invested immediately in repairing highways, bridges, transit systems and airports. The American Society of Civil Engineers gave U.S. public transportation infrastructure a D-plus grade last month (amm.com, March 20).
"An efficient infrastructure directly impacts the competitiveness of the manufacturing sector, and is critically important to the steel industry as a provider of critical infrastructure materials," Gibson said.
Plans for infrastructure development would increase demand for rebar products, 32.5 percent of which are used in highways, streets and roads, Chris Casey, president and founder of the rebar-buying co-op Independent Steel Alliance, told AMM. "Its overall a good thing theres money being set aside for infrastructure and for the kind of work our industry is going to be interested in."