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White House considers pre-midterm package of business tax breaks to spur hiring

These leaders have been a driving force behind the nation's economic policies since the financial crisis of 2008.

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Nonetheless, Obama's efforts to give the economy another boost have been stymied since the spring, when members of both parties became keenly aware of rising public concern about the national debt.

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Election Day looms

Last November, Obama announced that he would turn his attention to unemployment, calling it "one of the great challenges that remains in our economy." He declared the same intent two months later, telling House Democrats he would focus relentlessly on job creation "over the next several months." Senior aides went on television pledging that the mantra would become "jobs, jobs, jobs."

But other matters - health care, the BP oil spill - continually stole the limelight, creating the impression, some Democrats complain, that the president was barely focused on the economy at all.

His advisers described his attentiveness - noting, for example, that he discussed the economy with New York Mayor Michael R. Bloomberg (I) for 15 minutes before golfing - but got little traction.

"Obviously it's going to be hard to get anything done before the election, but it's really important for him to try, and to make the case to the American people that he's trying to do something and the Republicans aren't letting him," said Steve Elmendorf, a Democratic strategist. "We are at the final moments here."

Obama has another incentive to act: Tax cuts enacted during the George W. Bush administration are scheduled to expire in January, and Democrats - accused by Republicans of plotting to let them vanish - feel compelled to do something before the midterms.

Obama campaigned on a pledge to let cuts expire for the richest 2 percent of households, but some Democrats say the economy is too weak to raise anyone's taxes right now. And they fear a backlash from small-business owners who could be hit with higher taxes.

Pairing targeted business tax breaks with an extension of middle-class tax cuts could help alleviate those problems.

Permanently extending the research credit would cost roughly $100 billion over the next decade, tax analysts said. And depending on its form and duration, a payroll-tax holiday could cost more than $300 billion. While costing significantly less than last year's stimulus package, both ideas would be far more dramatic than anything the White House has so far acknowledged considering.

More spending on infrastructure, particularly transportation projects, is also under discussion. But it would be easier for a package composed purely of tax cuts to "avoid the stain of a 'bailout' or 'stimulus' label," said one official familiar with the talks, speaking on the condition of anonymity because the deliberations were private.

The president could roll out additional measures as soon as next week. Senate leaders hope to begin debating the tax issue in late September.

Obama will speak in the Rose Garden at 10 a.m. Friday after the release of the new jobs numbers.

kornbluta@washpost.com montgomeryl@washpost.com


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