White House officials are weighing a proposal to offer tax cuts to employers in return for hiring new workers. The administration considered this idea last year, but it gave way to a broader payroll tax deduction for workers in a bipartisan deal in December.
In addition, administration officials are considering proposing new investments in domestic clean energy as well as renewing tax breaks for companies using renewable energy — particularly wind power — that are to expire this year.
Also on the table is an initiative designed to help the ailing housing market without the need for more public spending. Under that proposal, the government-controlled mortgage giants Fannie Mae and Freddie Mac would rent out foreclosed properties that they own rather than try to sell them at depressed prices. That approach could relieve pressure on the housing market, one of the main drags on the economy.
Former administration officials are pushing other initiatives, such as a program to rebuild and rehabilitate schools as a way to improve education and stimulate the economy. A fan of this approach, Jared Bernstein, a former chief economist for Vice President Biden, calls the program “Fix America’s Schools Today.”
“I’d think the FAST idea would appeal to my former colleagues, as it has great jobs potential and should be highly visible in communities,” he said.
The search for new ideas comes as the economic recovery is running out of steam, dashing hopes that the unemployment rate will come down significantly in the near term. But as they discuss new ideas, White House officials are lowering expectations that any new policy could make a massive difference in the economy.
“The president will continue to promote and put forward ideas for things we can do to create jobs and grow the economy,” White House press secretary Jay Carney said. “The fact is that there is no magic bullet that lowers our unemployment rate to where it would be ideally.”
Carney said that the administration thinks that despite the recent economic weakness, there is not a “threat there of a double-dip recession.”
As the economy again slowed in recent months, Obama has been focused on negotiating a debt deal that the administration acknowledges will do nothing to help create jobs. Some economists say it might even make unemployment worse.
A focus on jobs plays much better to Obama’s political base in the Democratic Party, which has expressed frustration that the president has spent so much time talking about cutting government.
But Obama and his allies in Congress face significant constraints in pursuing programs that would require new federal spending because of GOP opposition.
“We are mindful” of Republican opposition to spending, said Charles E. Schumer (N.Y.), the No. 3 Democrat in the Senate. “We’re going to try to figure out some of our ideas that could be attractive to them.”
Schumer said his party would spend the next month winnowing ideas. Among the initiatives that Democrats might pursue are bills to fund highway construction and help veterans get jobs.
Republicans say that the government should eliminate unnecessary regulations and prevent new tax increases as a way to boost the economy.
A top goal for Obama and congressional Democrats is to extend both unemployment insurance and a payroll tax break. These measures were enacted at the beginning of the year. Obama could not achieve those extensions in the budget deal with Congress.
According to J.P. Morgan Chase, the expiration of these two measures as scheduled at the end of the year — combined with $25 billion in cuts in 2012 as required by the debt deal — could reduce economic growth next year by 1.5 percentage points.
In addition to the payroll tax cut and unemployment insurance, Obama has talked publicly about several other ideas for bolstering the economy.
They include passing free trade agreements with Korea, Colombia and Panama; patent reform; and an “infrastructure bank” that would help fund spending by companies and localities.
The patent bill is likely to come up for a vote next month, but the other measures do not have a clear path to passage. Some question whether the patent bill and free trade agreements would make much difference in the current economy.
“There are certain things being talked about, like patent reform and trade treaties, that at best create jobs in the long term,” said Lawrence Mishel, president of the liberal-leaning Economic Policy Institute.