Breaking News

HAMPTON, Georgia (CNN) — Laid-off construction worker Tim Baxter says new federal infrastructure spending could rescue him from his economic free fall — but he’s skeptical.
Laid-off boss Tim Baxter is skeptical that he’ll get a construction job from infrastructural stimulus programs.

Laid-off boss Tim Baxter is skeptical that he’ll get a construction job from infrastructural stimulus programs.  In the two years since the 54-year-old supervisor was let go from his firm outside Atlanta, Georgia, Baxter has exhausted his unemployment benefits and burned through much of his retirement savings while working two part-time jobs.

“My retirement money is just basically gone,” Baxter said recently during a visit to an empty construction site south of the city off Interstate 75. The stress comes when he thinks about whether the economy will begin to turn around by mid-year — or by year’s end.

“I don’t know that I can make it that long,” he said.

As Baxter well knows, the construction industry has been among the sectors hit hardest by the recession — drained by a housing market that went belly up. About a million construction industry jobs have disappeared in the two years since the sector peaked at about 7.5 million jobs in 2007, according to the Bureau of Labor Statistics.

Married with two grown daughters, Baxter often drives north of Atlanta on Interstate 85 and realizes he’s passing a concrete barrier wall for which he helped provide materials. He said it’s tough going from earning about $2,000 a week, as he did at his full-time construction job, to scraping out $400 a week between part-time jobs at a national appliance store and delivering newspapers.

All that stands between keeping a roof over his head and losing his home is his wife’s office job in the county government, Baxter said.

“There’s nothing out there in the commercial construction job market right now,” he said. “But I stay upbeat every day. I check online job boards like craigslist and send out resumes pretty regularly.”

Two key questions surround the plan to give states tens of billions of dollars to build and repair highways, bridges and water-sewer systems: How many jobs will spring directly and indirectly from the new infrastructure spending? And how quickly will those jobs be created?

About 27,800 jobs will be created for every $1 billion in federal highway construction spending under the stimulus package, said chief Department of Transportation economist Jack Wells. Roughly half of those jobs would be “induced” jobs, those “generated when highway construction workers respend their income on consumer goods and services — like lunch at McDonald’s or going to the movies or buying new clothes,” said Wells.

About a third of the highway construction jobs would be directly linked to the construction sites — including on-site workers like Baxter, and off-site workers who manufacture construction materials such as steel and concrete.

Another sixth of the jobs would be created to provide goods and services for the construction sites, including insurance and equipment rental.

At the White House, President Obama’s Council of Economic Advisers has been crunching numbers on the plan and estimates that 675,000 construction industry jobs could be created by the overall stimulus bill. See details about the White House job projections »

Economists point out that this obviously won’t be like Franklin Roosevelt’s Depression-era program that allowed virtually anyone with the strength to wield a shovel to join a construction crew or move to a work camp. Infrastructure construction jobs produced by the current stimulus legislation will largely go to workers with previous construction experience.

Baxter, however, remains skeptical that any of these new jobs will be available to him. He worries that contractors will choose younger, less experienced workers who they think will work for lower pay and benefits.

Meanwhile, Baxter’s situation may be about to worsen. One of his part-time employers has announced layoffs to take place between now and summer. “What’s next?” asked Baxter, acknowledging that there’s little he can do to protect himself.

“I refuse to give up hope that this situation will correct itself quickly.”

One of 427 cities requesting federal stimulus money through the U.S. Conference of Mayors, Atlanta has requested $1.9 billion for various infrastructural projects, including improvements to its water and sewer system, parts of which are more than a century old. The city expects the projects will require the creation of 18,500 new jobs. Video Watch top engineers give the U.S. infrastructure low marks »

“Obviously these projects aren’t going to solve the infrastructure need, but they will get people employed,” said Atlanta Watershed Management Commissioner Robert Hunter, the city’s water and sewer systems chief. “They’re projects that require a lot of people and on the construction side, they’re jobs that are accessible to a lot of the workforce.”

Washington has asked the U.S. Conference of Mayors for suggested projects that can break ground within 90 days of funding. This gives officials three months to collect bids from contractors and award the contracts, which some officials warn could pose bureaucratic pitfalls.
advertisement

“Part of the concern is the process of moving the money from Washington through a funding program and requiring people to apply for a funding program and qualify and then get approved and then bid,” said Hunter. “One of the ways to move this money quickly to get people employed is to do some prequalifications.”

“What I keep hearing from people is ‘Time is of the essence, we want to get people to work now,’ ” said Hunter. “Well, I think we need to look at how to streamline the approval of these contracts with full transparency, full accountability and no favoritism — to get people back to work.”

Plan cleanses up to $500 billion in bad assets, aids $1 trillion in lending

WASHINGTON – The Treasury Department on Tuesday unveiled a revamped financial rescue plan to cleanse up to $500 billion in spoiled assets from banks’ books and support $1 trillion in new lending through an expanded Federal Reserve program.

The renamed “Financial Stability Plan,” rolled out by Treasury Secretary Timothy Geithner Tuesday morning, will also devote $50 billion in federal rescue funds to try to stem home foreclosures and soften the crushing impact of the deep housing crisis now afflicting the entire economy.

The Treasury said a public-private investment fund will be established, seeded with government money, to leverage private capital so that so-called toxic assets can be sponged out of the faltering banking system. The hope is that that will enable banks to resume lending.

Geithner acknowledged that deep skepticism has developed over the fairness and efficiency of a $700 billion bank bailout program approved by Congress in October. He said leaders of some financial institutions that have received money had squandered the good faith that is needed to make the bank rescue effective.

“The spectacle of huge amounts of taxpayer money being provided to the same institutions that helped cause the crisis, with limited transparency and oversight, added to public distrust,” Geithner said.

Appearing on television Tuesday morning, White House press secretary Robert Gibbs said the overhaul of the financial system rescue plan unveiled by Geithner will provide much greater spending accountability to the American people.

The previous administration’s disbursement of money under the first installment of TARP — the Troubled Asset Relief Program — has been widely criticized in both public and private circles as a process too secretive and unworkable.

“It’ll be more transparent,” he said flatly.

Gibbs said that changes in the bailout system that Geithner is scheduled to announce will be aimed at making certain that banks getting taxpayer assistance will be “lending that money … to people who need it.”

The major overhaul of the program begun by the Bush administration seeks to address widespread criticism that banks were getting billions of dollars in taxpayer support with few strings attached and that all the government aid was failing to deal with the worst financial crisis to hit the country in seven decades.

The New York Times reported Tuesday that the new plan evolved out of a “spirited” debate between Geithner and President Barack Obama’s top political aides.

The Times, citing administration and Congressional officials, reported that the Treasury secretary largely prevailed in his opposition to more stringent restrictions on financial institutions sought by Obama aides, including David Axelrod, the senior advisor to the president.

Under the overhaul, the administration will seek to deal with those issues by more closely monitoring banks to make sure the money they receive is being used to increase lending. The biggest banks participating in the program will also have to undergo a stress test of their balance sheets to ensure they are in sound enough condition to receive additional government support.

The administration’s new plan, officials said, will include a government-private sector partnership aimed at removing toxic assets from banks’ balance sheets, although the details on how this program would operate were still being worked out.

Treasury officials suggested two approaches that the administration is considering, according to congressional staffers who were briefed on the plan Monday night and also spoke on condition of anonymity before the program was unveiled.

These aides said the government might provide guarantees for the bad assets to establish a floor on possible losses, or perhaps provide low-cost financing through the Federal Reserve for investors willing to purchase the bad assets.

President Barack Obama, speaking at a prime-time news conference Monday night, said his overhaul of the financial rescue program would bring “transparency and oversight” to the heavily criticized program.

Requiring ‘restraint’ from banks

He said the overhaul would correct previous mistakes such as a “lack of consistency” and what he said was the failure to require banks to show “some restraint” in terms of executive compensation and spending in such areas as corporate jets.

Congress passed the financial rescue bill on Oct. 3 and the first $350 billion in the program was committed by the Bush administration under the direction of former Treasury Secretary Henry Paulson.

However, that effort generated a huge political backlash with critics charging that the Bush administration failed to impose enough restrictions on banks to make sure they used the billions of dollars they were receiving to boost lending and keep the country from toppling into an even deeper recession.

In part because of the political outrage, the Obama administration decided against seeking any additional money beyond the $350 billion left to be spent as part of its initial overhaul. Many economists believe that $700 billion will not be enough to get the financial system operating normally and that the administration will eventually have to ask for billions more, pushing the ultimate price tag for the rescue to $1 trillion or more.

Asked about the possibility that his administration will ultimately need more money, Obama said Monday that the goal now is to “get this right” because it was important to restore financial market confidence so banks will resume more normal lending.

Officials, speaking on condition of anonymity before the plan’s release, said it would include the following major elements:

• Continued government purchases of stock in banks as a way to bolster banks’ balance sheets. The new stock purchases will come with tighter oversight to make sure banks are using the government support to increase lending. The new requirements will not apply to banks that have already received support.
• A government-private sector partnership aimed at encouraging private investors to buy banks’ bad assets, although details were yet to be fully worked out.
• Provision of at least $50 billion of the remaining $350 billion rescue fund to bolster government efforts to help homeowners deal with rising foreclosures in the current steep housing slump. The actual details on the housing measures were being delayed for an announcement in the coming weeks.

The mortgage support would be a major policy shift from the Bush administration, which relied on voluntary, industry-led measures and did not want to commit taxpayer dollars to foreclosure prevention. The administration was still reviewing various proposals on exactly how the new anti-foreclosure efforts would be implemented.

JERUSALEM (AP) — Benjamin Netanyahu, the front-runner in polls ahead of Israel’s election this week, declared Sunday he would not give up the strategic Golan Heights for peace with Syria, an apparent attempt to toughen his right-wing credentials after a last-minute charge by a hardline party.

Israelis go to the polls Tuesday after one of the calmest campaigns in the nation’s history, despite the vital issues facing Israel — war, peace, terrorism and economic recession. The electorate has appeared fatigued after Israel’s three-week offensive against Gaza’s Hamas rulers last month.

Netanyahu has been leading in the polls since shortly after the Feb. 10 election was called in November, but his lead has been shrinking in recent weeks as another hawkish party, Yisrael Beitenu, or “Israel is our home,” surges with its campaign against Israel’s minority Arab citizens.

Israel captured the Golan Heights from Syria in the 1967 war, after Syria gunners shelled northern Israeli villages for 19 years. Syria demands return of the territory as a prerequisite for peace, but many Israelis hesitate to give up such a strategic asset.

In moving further to the right, Netanyahu could be setting up a confrontation with the Obama administration if he becomes Israel’s leader. Netanyahu opposes talks on a peace treaty with the Palestinians and favors allowing Israeli settlements in the West Bank to expand, two points that are likely to clash with Washington policy.

Netanyahu’s Likud Party has been the mainstream voice of Israel’s right wing for decades, but the erosion in its support has led him to underline his hawkish positions in the final hours of campaigning.

With polls showing him holding a slim lead over Kadima, the present ruling party, and its candidate, Foreign Minister Tzipi Livni, Netanyahu traveled to the Golan Heights on Sunday to emphasize their policy differences.

While Livni has not ruled out returning the Golan Heights in exchange for full peace, and the third candidate for premier, Defense Minister Ehud Barak of Labor, offered the Syrians that deal when he was premier in 2000, Netanyahu insisted he would say no.

“The Golan will never be divided again, the Golan will never fall again, the Golan will remain in our hands,” he declared during his campaign stop there. Netanyahu and his backers consider the strategic value of the territory as more important than a peace treaty.

Netanyahu has carefully not criticized Yisrael Beitenu or its leader, Avigdor Lieberman, who was Netanyahu’s chief aide when he was premier from 1996-1999, hoping for a partnership after the election.

Lieberman’s main campaign plank is to force Arabs, who make up about 20 percent of Israel’s population, to swear loyalty to the Jewish state or relinquish their citizenship. Some polls show Lieberman’s party approaching 20 seats in the 120-seat parliament, trailing Likud and Kadima, polling less than 30 seats each, but well ahead of Labor, with about 15. Israelis vote for parties, not candidates.

His support could catapult him into a key role in the new government, giving him a large voice in peace moves and domestic policy as well.

However, polls are notoriously inaccurate in Israel. This time the pollsters’ task is even more difficult because the gaps among the parties are relatively small, turnout is expected to be the lowest in Israel’s history and a plethora of small parties could upset the equation.