As the U.S. continues to putter along, Washington is looking for new ways to spur growth. While there is much debate over the effectiveness of the previous measures taking by the federal government (cash for clunkers, TARP, etc.), the Obama administration unveiled a new plan over the weekend to create job growth. The administration hopes that the proposed $50 billion in infrastructure upgrades and tax breaks will lower the nation's persistently high unemployment rate, ultimately leading to GDP growth and prosperity. Unemployment currently sits at 9.6% rate.

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A $50 Billion Dollar Plan
The key piece to the president's latest round of stimulus is a $50 billion, six-year investment in upgrading the nation's infrastructure. The proposed money would reach investments in rebuilding 150,000 miles of road, constructing 4,000 miles of a new railway system. The plan also calls for an implantation of a NextGen air traffic control system as well as rehabilitating 150 miles of airport runways to reduce travel time and delays. The plan outlines a proposal for an infrastructure "bank" to leverage federal dollars and focus on investments and upgrades of national and regional significance. This fund would allow private and state investors to participate in the process.

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It also includes a proposal to allow businesses to fully write off capital investments through 2011, and allows for a permanent extension of research and development tax credits. With an already ballooning deficit, the White House is being creative with how the public works plan will be funded. Most of the budget for the plan is to be funded through the elimination of several tax deductions for oil and gas companies.

Benefactors of the Plan
While the bill comes at a rocky political time with regards to mid-term elections, it does highlight a growing problem within our nation: the disrepair of national infrastructure. The U.S. Bureau of Transportation Statistics reports that 25% of the 600,000 bridges in the United States are "structurally deficient" or "functionally obsolete." Worldwide governmental expenditures on infrastructure are estimated to cost nearly $2 trillion annually through 2015, and total more than $35 trillion over the next 20 years. Over the short term, many companies should see a bump in earnings if the plan is enacted. However, other the long haul, infrastructure remains a compelling theme. Investors can add the SPDR FTSE/Macquarie Global Infra 100 (NYSE:GII) as a way to play this global build-out.


As the transit system will be a major benefactor of the president's plan, investments in this area could shine. The iShares Dow Jones Transportation Average (NYSE:IYT) is one of the easiest ways to add exposure to railroads like CSX (NYSE:CSX). In addition, the current administration wants to implement a cross- country high-speed rail system that will increase convenience and productivity. The PowerShares Global Progressive Transport (Nasdaq:PTRP) follows a basket of stocks that promote greener transportation initiatives. This includes hybrid bus and high speed rail makers.

The PowerShares Dynamic Building & Construct (NYSE:PKB) is as close to a heavy-construction ETF as investors can get with top holdings in URS (NYSE:URS) and Insituform Technologies (Nasdaq:INSU). However, the fund does include exposure to consumer-discretionary names like Home Depot (NYSE:HD).

Increased construction means increase usage of raw material. As a way to play the commodities side, the PowerShares DB Base Metals (NYSE:DBB) which follows futures contracts on copper, aluminum, tin and nickel and the Market Vectors Steel ETF (NYSE:SLX) which follows stocks within that sector, offer ways to play a boost in raw materials demand.

Finally, created during the first recover act, Build America Bonds (BABS) are a way for investors to help fund the American recovery. These bonds feature interest payments that are subsidized by the federal government, reducing municipalities' and states' coupon payments. The PowerShares Build America Bond (NYSE:BAB) and the SPDR Nuveen Barclays Cap Build America Bond (Nasdaq:BABS) are the easiest ways to access this market. (Learn more about BABs in Should You Invest In Build America Bonds? and Investing In The Recovery With Build America Bonds.)

Bottom Line
With the economy slowly moving along, the administration is once again pulling out the stops. The president's current $50 billion plan to reinforce America's crumbling infrastructure could be a step in the right direction. Over the short term, these ETFs could see a bump in shares prices. However, over the long haul, these funds offer a great play on the necessary rehabilitation of our vital infrastructure needs. Investors should allocate some capital in this area.

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