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Economic Policy Is Working, Obama Says

President Obama, with Veterans Administration Secretary Eric K. Shinseki and Marine Sgt. James L. Miller, discusses the new G.I. Bill.
President Obama, with Veterans Administration Secretary Eric K. Shinseki and Marine Sgt. James L. Miller, discusses the new G.I. Bill. (By Gerald Martineau -- The Washington Post)
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Biden will be in Detroit on Wednesday to talk about the same subject. And Energy Secretary Steven Chu will travel to North Carolina to promote the research in advanced battery technology.

But with the national unemployment rate still rising, the strategy holds some risk for an administration worried that a recovery in that area may shadow next year's congressional elections.

Some economists predict that the next quarterly report will show growth, ending a recession that officially began in December 2007. But Obama and his senior advisers have been careful to note that the economy will continue to shed jobs, perhaps into next year.

House Minority Leader John A. Boehner (R-Ohio) said Monday in a statement that it is "baffling that administration officials would celebrate a bloated, ineffective trillion-dollar stimulus that hasn't produced the jobs nor the immediate jolt to the economy that they promised."

According to the Labor Department, 144 metropolitan areas reported jobless rates of more than 10 percent in June, a huge increase from the six metropolitan areas that had rates that high the previous year. The national unemployment rate for that month rose to 9.5 percent. Such figures for July are scheduled to be released Friday.

The stimulus plan provided money to extend the time unemployment benefits can be collected, but advocates for the jobless are urging the White House and Congress to grant another extension. Nearly 1.5 million people are likely to run out of unemployment insurance by December, according to new projections by the National Employment Law Project, a nonprofit group that advocates on behalf of workers.

Obama also has yet to outline how he intends to reduce long-term spending, which as of now would require $9 trillion in new borrowing over the next decade. On Monday, his administration appeared to rule out a middle-class tax increase that many economists say is the only way to address the nation's precarious long-term fiscal condition.

The president pledged during last year's campaign not to raise taxes on families making less than $250,000 a year, and White House press secretary Robert Gibbs told reporters Monday that he would keep that commitment. The comments came a day after Lawrence H. Summers, a top Obama economic adviser, said "it is never a good idea to absolutely rule things out no matter what" when asked on CBS's "Face the Nation" whether taxes would go up for middle-class Americans.

"I think the president has backed himself into a corner here," said Marc Goldwein, policy director of the bipartisan Committee for a Responsible Federal Budget. "He wants big spending on health care, energy and education. And you can't get that from taxing only the top 5 percent of income earners. That makes it difficult to do tax policy."

Douglas J. Holtz-Eakin, McCain's former economic policy adviser, questioned whether the economy had responded to the stimulus measure's public spending and tax cuts. Although the economy as a whole contracted more slowly than expected, he noted that some sectors that were expected to benefit most from the legislation continued to suffer.

"We do need to look for future growth from businesses, not households," he said. "But what they are calling 'rebuilding' is only a policy change that fits with what they want to do, not a necessity to fix a broken economy."

Staff writer Amy Goldstein contributed to this report.


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