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Obama Plans Package to Boost Economy
By Julianna Goldman and Hans Nichols - Aug 18, 2011 2:39 AM GMT+0800
President Barack Obama plans to ask Congress for billions of dollars in fresh spending to reduce unemployment while also proposing to take a bigger bite out of the nation’s long-term deficit.
With the U.S. unemployment rate at 9.1 percent and economic growth slowing, Obama plans to propose a mix of tax cuts and infrastructure spending that goes beyond the measures he’s been promoting over the last several weeks, an administration official said, speaking on condition of anonymity because details for the speech haven’t been completed.
Separately, Obama said today he will present to a special 12-member congressional committee charged with coming up with at least $1.5 trillion in deficit reduction his own proposal for making deeper cuts in the nation’s debt. It will include raising government revenue as well as cutting spending, along the lines of the scuttled “grand bargain” he tried to strike with House Speaker John Boehner in July.
“I don’t think it’s good enough for us to just do it part way, if we’re going to do it, let’s go ahead and fix it,” Obama said today at a town hall event in Atkinson, Illinois. “And if we’re going to fix it, the only way I believe to do it in a sensible way is you’ve got to have everything on the table.”
The president will present his ideas in a speech after the U.S. Labor Day holiday, which is Sept. 5, and Republican congressional leaders are already signaling opposition to any initiatives that would require additional federal spending.
‘Less Government’
“The American people understand that Washington can’t keep spending money it doesn’t have,” Boehner, an Ohio Republican, and Majority Leader Eric Cantor of Virginia wrote in an opinion article published in USA Today. “They want to see less government -- not more taxes.”
Senate Republican leader Mitch McConnell of Kentucky said in a statement that Obama has “finally” reached the conclusion that reducing the deficit will help the economy.
“But continuing the spending spree on failed stimulus programs won’t shrink the deficit,” he said.
Obama said the country can’t afford to choose between deficit reduction and measures to stimulate the economy and create jobs.
‘We can do both in a sensible way,’’ he said.
As part of his jobs package, Obama is said to be considering two sets of ideas: those that would require legislative action and steps that can be taken by the executive branch alone, without congressional approval.
On his three-day bus tour through Minnesota, Iowa and Illinois this week, Obama has been urging Congress to extend the 2-percentage-point payroll tax cut for workers and longer unemployment insurance benefits, as well as creating a program to build roads and other infrastructure.
To offset the cost of the new initiatives, Obama will seek additional long-term deficit reduction.
The administration wants “aggressive” steps on the deficit “because it helps you pay for the kinds of things you need to do in the near term to grow the economy and create jobs,” White House press secretary Jay Carney said on MSNBC’s “The Daily Rundown” program today, without giving specifics.
The president has used his trip through the Midwest to repeatedly call on voters to pressure Congress to embrace measures that could improve the economy. At a forum on the rural economy in Peosta, Iowa, yesterday, he questioned “the refusal of a faction of Congress to put country ahead of party” and the “politics of the short term.”
“I need you to send a message,” Obama said today in Illinois. “I need you to send a message to folks in Washington: stop drawing lines in the sand, stop engaging in rhetoric instead of actually getting things done.”
Taxes
He also sought to counter Republican opposition to raising taxes for the wealthiest Americans, citing a New York Times opinion article written by billionaire Warren Buffett. The Berkshire Hathaway Inc. chairman and chief executive wrote that the nation’s richest individuals have been “coddled” and that he paid a smaller percentage of his taxable income to the government than anyone else in his office.
“These days, the richer you are, the lower your tax rate,” Obama said. “That can’t be something that is defensible regardless of party.”
Standard & Poor’s first-ever downgrade of the U.S. credit rating, risks of a spillover effect from Europe’s debt crisis and volatility in global markets are drawing comparisons to the beginning of the 2008 financial crisis.
The benchmark Standard & Poor’s 500 Index lost 0.3 percent to 1,188.66 at 2:35 p.m. in New York. The index had rallied 7.5 percent over the three days before yesterday amid a decline in jobless claims, an increase in retail sales and better-than- estimated profits. The S&P 500 is still down 12 percent from April 29 on concern about Europe and an economic slowdown.
Political Hurdles
Adding to the political hurdles the president faces in getting new measures through a divided Congress, the candidates vying to become the Republican nominee for president in 2012 are staking their campaigns on voter dissatisfaction with the state of the economy and government spending.
Voters are skeptical of both sides. Obama’s job approval rating was 39 percent in a Gallup daily tracking poll taken Aug. 11-13, the lowest since he took office. Congressional approval was at 13 percent, tying an all-time low, in a Gallup Aug. 11-14 poll.
That was the sentiment of Jerry Smith, a dairy farmer and a registered Republican who was among the crowd that got a surprise visit from Obama this morning at the Whiteside County Fair in Morrison, Illinois.
“It’s a big mess,” he said. “You can blame it on everybody.”
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