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Analysis: Is Congress hurting the economy?

Sep 5, 2011, 10:13 p.m.
The Capitol dome and Senate (R) in Washington, August 2, 2011. REUTERS/Jonathan Ernst

Don't count on Congress to do much to help.

President Barack Obama is expected to unveil a job-creation package on Thursday, but analysts say the Republican-controlled House of Representatives is likely to torpedo many of its most ambitious elements.

Republican ideas for boosting the economy, centered around scaling back regulations, aren't expected to get anywhere in the Democratic-controlled Senate.

Government layoffs at the state and local level have undercut private-sector gains in recent months. Budget cuts attached to the debt-ceiling deal could force the federal government to lay off workers in the coming months as well.

Given the ideological chasm between the two chambers, Congress has had trouble passing even routine legislation that keeps existing projects moving forward.

The airport funding lapsed last month due to a squabble over $13 million in subsidies for rural air services.

That led to $400 million in lost ticket tax revenue and as-yet untallied disruption for contractors. Many are planning to bill the government for their expenses.

Those funds could expire again if Congress does not act by September 16. Highway and mass transit construction projects could also face disruption if Congress does not renew them by the end of the month.

Doubts about Congress' ability to keep the money flowing might lead contractors to charge more for their services even at a time when work is hard to come by, one industry official said.

"If the certainty of being paid goes away, I think contractors are either going to start raising their bids to protect themselves against that uncertainty, or they're just going to drop out of bidding," said Ken Simonson, chief economist for the Associated General Contractors of America. "They're extremely frustrated."

(Editing by Ross Colvin and Christopher Wilson)

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