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As midterms loom, Democrats work to shore up faltering recovery

Later, White House deputy press secretary Bill Burton defended Geithner and Summers, calling them "the people who made the tough decisions, who did the hard work to get the economy going again."

As recently as this spring, the U.S. economic recovery appeared to be accelerating. Many economists gave credit to the stimulus package and the $700 billion bailout of the banking system proposed by Bush and carried out by Obama.

On Tuesday, the nonpartisan Congressional Budget Office affirmed that view of the stimulus package, estimating that it added as many as 3.3 million jobs to the economy during the second quarter of this year and may have prevented the nation from lapsing into recession. The CBO also said the package will cost about $814 billion through 2019 - less than the $862 billion previously estimated.

But momentum is fading fast. On Friday, the Commerce Department will revise its estimate of second quarter economic growth. Forecasters expect gross domestic product to have risen at a 1.4 percent annual rate during the April through June quarter - far below the 2.4 percent rate first estimated and below the 2.5 to 3 percent level at which the U.S. economy should expand based solely on population growth and increased productivity.

Instead of gaining ground in the second quarter, the United States economy lost ground.

While many private and government forecasters still agree that growth will return to about 2.5 percent for the second half of the year, that consensus could soon change if the economy continues to deteriorate. And even a 3 percent growth rate is not strong enough to significantly bring down unemployment.

White House economist Jared Bernstein said the administration is "by no means out of bullets." He cited billions of dollars that have yet to be spent from last year's stimulus package and ticked off a list of policies the White House is pursuing, including a measure designed to encourage hiring by small businesses that has been blocked by Republicans in the Senate. Democratic leaders in the Senate say they hope to push the bill to final passage when Congress returns after Labor Day.

Obama is also pressing for tax rebates for homeowners who invest in renewable energy projects and other green renovations, as well as for an extension of an existing tax credit for manufacturers of solar panels, wind turbines and other clean-energy equipment.

"We're continuously promoting the most effective ways to create the most jobs, and our agenda is demonstrably working to achieve that goal," Bernstein said. "The Recovery Act contributed to the turnaround from horrifying negatives to positives, and that's the momentum we are trying to build on."

He acknowledged that Congress had not approved all the stimulus money Obama had sought. But, he said, "In the world we live in, we're doing everything we can to create the conditions for greater job growth in key sectors of the economy."

montgomeryl@washpost.com irwinn@washpost.com

Staff writers Brady Dennis, Paul Kane and Michael Shear contributed to this report.


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