The White House has been developing a package of jobs proposals since last month, when Obama completed months of negotiations with Republicans over a deficit-reduction deal.
The president’s plan, in large part, will call for continuing current measures to stimulate the economy, including a 2 percentage-point payroll-tax cut and extended unemployment benefits, administration officials say. Obama is also likely to call for an additional tax cut for companies that hire workers. Those measures together could cost about $200 billion next year.
Obama is planning to propose $100 billion or more in spending on infrastructure, state and local aid, and programs that target people who have been unemployed for more than six months, according to officials and other people familiar with the deliberations.
Not only will he pledge new spending to spur hiring, he is also likely to call for overhauling the way the government spends money. This could include an infrastructure bank that would pool tens of billions of federal dollars with state or private money to build roads and commercial buildings and to rehabilitate schools. Obama has suggested that the initiatives could lead to the hiring of 1 million unemployed construction workers.
The president is planning to put a heavy emphasis on providing aid to hard-hit states and localities so they can hire teachers or avoid further layoffs, according to administration officials and other people familiar with the matter. And he is expected to call for a program that provides training and subsidies to get the long-term unemployed back on the job.
These proposals would come as the Federal Reserve, which is independent of the administration, is moving toward new steps of its own to give the economy a boost. With a pivotal meeting two weeks away, Fed officials are considering measures aimed at lowering interest rates on mortgages, business investments and other kinds of long-term loans.
Help for housing
In announcing his jobs program, Obama is planning to mention measures that the administration has undertaken lately to benefit the ailing housing market, including a program that helps reduce payments for jobless homeowners. As part of this housing effort, he is likely to call for a broader refinancing of mortgages in order to put hundreds of dollars back in the pockets of homeowners each month, administration officials said.
With the exception of the housing program, all the measures would require congressional approval. White House officials acknowledge that the full package has slim prospects of passing. Republicans are deeply skeptical of any new public spending.
But White House advisers say they’re confident that, at the very least, the payroll-tax cut will be renewed because it so directly affects the take-home pay of middle-class workers. And they are hopeful that other ideas may gain traction, such as the infrastructure bank, which wouldn’t rely exclusively on federal money.
David Axelrod, a close adviser to the president, said Obama will make clear that Republicans are to blame if they don’t agree to the jobs measures.
“People recognize the obstacles here and where they’re coming from. We don’t go up there with the anticipation that nothing will pass and nothing will work,” Axelrod said. “But Harry Truman once said if you can’t make them see the light, make them feel the heat. And that’s what the president is going to do.”
Next week, the president will announce detailed plans to offset the proposed federal spending with increased revenue and reductions in spending down the road.
Senate Minority Leader Mitch McConnell (R-Ky.) on Wednesday blasted the economic stimulus that Obama pushed through Congress two years ago and suggested that more big spending now would be a mistake.
“According to the president, anyone who opposes this agenda is playing partisan games,” McConnell said. “Well, the president can attempt to blame our economic problems all he wants on his political adversaries or his predecessors or on natural disasters. But at the end of the day, he’s the one, as he’s said himself, who’s responsible for what happens on his watch.”
A new calculation
Top White House officials have long argued that significant action to bolster the economic recovery was necessary, but they had concluded that there was no political appetite for new spending. The significant deterioration in the economy — which is in far worse shape than the president anticipated — has made them revisit that calculation.
“The president has never stopped pushing for stronger investments in areas like infrastructure and housing,” said Gene Sperling, director of the National Economic Council. “What has changed in recent months is that as economic projections have worsened, more and more policymakers and experts are seeing the importance of these policies for jump-starting growth and job creation.”
Economists disagree over how large an effective stimulus package should be. Some conservative economists say that additional government spending would not be helpful and that the private sector needs to recover without government interference. Some liberal economists say that the original $814 billion stimulus package, proposed by Obama and enacted by Congress two years ago, was woefully small and that another program of similar scope is necessary. Yet other economists suggest that a stimulus of about $300 billion could lead to steady, though not vigorous, economic growth next year.
Obama and his aides have begun to brief allies and lawmakers on the major elements of the plan, though they are withholding details, according to people familiar with the conversations. The briefings have raised expectations among some liberals, who have called on Obama to be bolder in his jobs program, even in the face of Republican opposition.
“They talk about this being big, bold and on a scale to address the problem,” said Bill Samuel, the AFL-CIO’s legislative director. “I think they generally believe we will be happy with the speech, and they know what it will take to make us happy. They’re not dampening expectations.”
Rep. Chris Van Hollen (Md.), the senior Democrat on the House Budget Committee, said he thinks Obama’s plan has the “right combination” of measures that will have a chance at passage in the Republican-led House, but will also serve as a way to draw contrasts for voters between the GOP and Obama.
“It would have been a mistake to try and narrow the bore of the speech to the point that it might get out of the Republican-controlled Congress,” Van Hollen said. “That might be a very short speech. What the president wants to do is tell the country what he thinks is necessary and to fight to get as much as possible.”
Measures ‘weren’t enough’
Obama has been skewered — largely by economists from his own party — for proposing what those critics see as a too-small stimulus in early 2009 and then not following through with additional significant measures to drive economic growth. Obama has periodically renewed his calls for measures to bolster the economy, but they have mostly fallen on deaf ears.
“These were the correct measures then, and they remain so,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and a former White House economic adviser. “The problem . . . is not that they haven’t worked. It’s that they ended too soon or weren’t enough.”
Some supporters say Obama mistakenly thought he could leverage his campaign-era image as someone who transcended conventional politics to compromise with Republicans once in power.
“The president said that the politics of the ’90s had grown so bitter because of partisanship on both sides. He was going to fix that by reaching out to sensible, flexible people in the Republican Party to come up with common-sense economic policies. That approach was doomed from the start,” said Sean Wilentz, a historian at Princeton University.
Obama previewed the tone of his speech on Monday at a labor rally in Detroit.
“We’re going to see if we’ve got some straight shooters in Congress. We’re going to see if congressional Republicans will put country before party,” he said, addressing 13,000 workers. “We’ll give them a plan, and then we’ll say, ‘Do you want to create jobs?’ ”
White House officials have said the plan includes policies that many Republicans have supported.
Staff writer Peter Wallsten contributed to this report.