Obama confronts jobs ‘crisis’ with $447 bln plan

WASHINGTON, (Reuters) – U.S. President Barack Obama  challenged Congress yesterday to enact a $447 billion package  of tax cuts and new spending to revive a stalled job market but  he faces an uphill fight with Republicans.

Barack Obama

With his poll numbers at new lows amid public frustration  with 9.1 percent unemployment, Obama called for urgent action  on a broad set of proposals he laid out just 14 months before  voters decide whether to give him a second term.

“You should pass this jobs plan right away,” he said in a  forceful tone in the televised speech to a rare joint session  of Congress.

“The question is whether, in the face of an ongoing  national crisis, we can stop the political circus and actually  do something to help the economy,” Obama said, taking a swipe  at Republicans who have consistently opposed his initiatives.

Obama, who pushed through an $800 billion economic stimulus  package in 2009, said his new plan would cut taxes for workers  and businesses and put more construction workers and teachers  on the job through infrastructure projects.

As fears rise of another U.S. recession and more global  economic gloom, G7 finance ministers meeting in France on  Friday are set to encourage countries that can afford it to do  more for growth.

U.S. Treasury Secretary Tim Geithner said on Thursday that  efforts to create U.S. jobs could help the world economy regain  speed.


During the speech, Republicans reacted to many of Obama’s  proposals with stony silence. Party leaders said later they  would work with the president to find common ground even if  they were unlikely to support the entire package.

“Let’s do the things we agree on, set aside the things we  differ on and get to work so we can have some results for  people who are hurting so badly out there,” Eric Cantor, the  Republican leader in the House of Representatives, told  Reuters.

Cantor suggested he could support expanding a payroll tax  cut that passed Congress last year. But other Republicans said  they were not inclined to back it this time.

A top Senate Republican, Jon Kyl, said Obama “merely dusted  off a tired agenda of old ideas wrapped in freshly partisan  rhetoric.”

Obama is seeking to seize the initiative in his bitter  ideological battle with Republicans, ease doubts about his  economic leadership and turn around his presidency at a time  when his 2012 re-election bid looks unexpectedly daunting.

“This struck me as a pretty well-balanced plan. It’s got  something for everybody,” said Omer Esiner, senior market  analyst at Commonwealth Foreign Exchange in Washington. “If  Congress can’t agree on something like this then there’s not  much hope for the paralysis changing.”

Obama wants Congress to pass his “American Jobs Act” —  which administration officials said would cost $447 billion —  by the end of this year and offset the cost with deficit cuts.
But a deal may be hard to achieve with politicians already  focusing on the national elections in November 2012.

If Obama can push through his plan, it might provide an  economic boost quickly enough for him to reap political  benefits. If it stalls in a divided Congress, his strategy will  be to blame Republicans for obstructing the economic recovery.

A JOLT”    

Obama said his proposed plan would “provide a jolt to an  economy that has stalled and give companies confidence that if  they invest and hire there will be customers.”

He proposed extending unemployment insurance at a cost of  $49 billion, modernizing schools for $30 billion and investing  in transportation infrastructure projects for $50 billion.

But the bulk of his proposal was made up of $240 billion in  tax relief by cutting payroll taxes for employees in half next  year and trimming employer payroll taxes as well.

Obama also said he was seeking to broaden U.S. homeowners’  access to mortgage refinancing to help the ailing housing  market — a proposal that drew rare applause from Republicans  during the speech.

U.S. stock index futures fell and analysts said investors  would await clear signs of how the plan would fare in  Congress.

How much of the jobs package is viable remains in question.  Almost all of it ultimately depends on winning support from  Republicans who control the House.

Bipartisan cooperation could be hard to come by in  Washington’s climate of political dysfunction where a bruising  debt feud this summer brought the country to the brink of  default and led to an unprecedented U.S. credit downgrade.

But Obama insisted that “everything in here is the kind of  proposal that’s been supported by both Democrats and  Republicans — including many who sit here tonight — and  everything in this bill will be paid for. Everything.”

Republicans will still be resistant, not wanting to give  Obama a helping hand before the election. But they will be  under pressure to cede some ground to help boost the economy or  risk a voter backlash in 2012.

Obama’s choice of a joint session of the House and Senate,  a setting better known for the president’s annual State of the  Union address, was intended to lend ceremonial pomp to a  critical speech and push Republicans to cooperate.

But it also carried the risk of raising public expectations  that will be hard to meet.

Obama’s speech has taken on new urgency after the latest  Labor Department report showed zero employment growth in  August, stoking fears of a slide back into recession.

Federal Reserve Chairman Ben Bernanke, who has said the  onus for helping the economy now lies mainly with lawmakers  controlling spending, warned that overzealous belt-tightening  could slow down the “erratic” recovery.

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