The spending plan totals $787 billion, divided generally into tax benefits and spending programs, to be spent over the next two years. Major projects of the bill include doubling the domestic renewable energy capacity, weatherization programs that include the modernization of 75 percent of federal buildings, a school modernization program to upgrade 10,000 schools, and an investment in new infrastructure that is the largest increase in funding for bridges, roads and mass transit since the 1950s. The government hopes the plan will create or save more than 3.5 million jobs over the next two years. Because the bill includes both tax benefits and spending, it is difficult to find an exact amount that will go towards projects benefiting coatings. But while estimates vary, it is clear that a significant part of the plan is targeted at the industries most closely tied to our industry.
The effect of the economic crisis on the automotive industry has had a deep impact on the coatings industry. The ARRA includes both direct and indirect investment in the American automotive industry. The bill includes increased funds for federal fleet purchases and a tax incentive for individuals who purchase a new automobile. President Obama, in his March 30 speech regarding the automotive industry, noted that the tax incentive could lead to as many as 100,000 new car sales. Additionally, other automotive-related industries, such as manufacturers of earthmoving equipment, cranes and bulldozers, will benefit indirectly from the stimulus package as demand for this equipment picks up with infrastructure spending. Additionally, coatings will be required for mass transit-related spending on production of busses and light rail, another item in the bill.
Outside of the stimulus package, President Obama promised to honor the warranties of cars manufactured by GM and Chrysler, and Ford and GM introduced job loss programs that help with car payments should purchasers lose their jobs. Both of these things give me hope that consumers will again begin to purchase cars.
The other industries that have been hit hard by the economic crisis are housing and construction. A significant part of the ARRA is devoted to spending and tax benefits in these two sectors.
The bill offers a number of tax breaks aimed at jump-starting the housing industry. They include an $8,000 refundable first-time home buyer credit, credits for energy-efficient improvements to existing homes, credits for financing low-income housing construction and approximately $5 billion to weatherize low-income houses.
As for the construction industry, upwards of $100 billion of the ARRA is dedicated to infrastructure spending. Large-scale investments include approximately $28 billion in funds for highway and bridge construction, $19 billion for public transportation projects, and $16 billion for wastewater and drinking water infrastructure. There is also money set aside for modernization and repair of state and federal buildings, including $4.2 billion for Defense Department facilities, and education money given to states that can be used for school repair and modernization.
Another big part of the stimulus bill that will help the paint and coatings industry is the emphasis on renewable energy and green technology. Money has been set aside for research in new technologies and spending on current technologies. Investment in renewable energy and green technology helps in many ways. In the short term it puts money into the economy, creating demand for products and services. It also generates cost savings through conservation and will lower the cost of energy for energy-intensive industries. In the long term, increased research and investment will create new products and services that we can export to the world. Another benefit is the freeing up of raw materials for chemical production rather than energy production.
As I write this Viewpoint, the Transportation Department has just announced that so far it has made $48 billion of stimulus money available for roads and infrastructure, funding or agreeing to fund an estimated 2,000 projects. Although it is unclear exactly how much the investment will help the United States extricate itself from this economic crisis, this much seems clear: we are investing in what America does best and that investment will help our industry. We are building, we are innovating, and we are working to develop the products that will be necessary as the world moves forward.