Obama to Call for Urgent Steps on Economy
President Barack Obama will lay out a jobs package worth more than $300 billion on Thursday, staking his re-election hopes on a call for urgent action to revive the economy and challenging Republicans who have consistently opposed his initiatives.
With his poll numbers at new lows amid voter frustration with 9.1 percent unemployment, Obama will make tax cuts for middle-class households and businesses the centerpiece of the plan and will press for new spending to repair roads, bridges and other deteriorating infrastructure.
Obama, who pushed through an $800 billion economic stimulus package in 2009, will use his televised speech to a joint session of Congress at 7 p.m. EDT (2300 GMT) to urge passage of his "American Jobs Act" by the end of this year.
That may be hard to achieve with politicians already focusing on the presidential and congressional elections in November 2012.
If it does pass, Obama's plan might provide an economic boost quickly enough to help his re-election prospects. If it fails, his strategy will be to paint congressional Republicans as obstructionist and blame them for the stagnating economy.
Already on Thursday, White House Chief of Staff Bill Daley criticized what he described as a do-nothing climate.
"It's time for Congress, after a five-week vacation, to come back and do something and not just say 'no' to everything that gets proposed in this town," Daley said on CBS.
Surprisingly weak jobs reports have heightened fears the United States may be headed for another recession. In the latest gloomy sign, the government said the number of Americans filing new claims for jobless benefits rose unexpectedly last week to 414,000 from 412,000 in the previous week.
Still, a considerably narrower trade deficit for July offered a ray of hope for growth in the third quarter after a sluggish first half of the year.
Federal Reserve Chairman Ben Bernanke, who has said the onus for helping the economy now lies mainly with lawmakers who control spending, warned that overzealous belt-tightening in the near term could slow down the "erratic" recovery.
G7 finance ministers meeting in France on Friday are set to encourage countries that can afford it to do more for growth. U.S. Treasury Secretary Tim Geithner said on Thursday efforts to create U.S. jobs could help the world economy regain speed.
On the political front, Obama needs to change perceptions that he is a weak leader. His economic stewardship has been criticized by Republicans and fellow Democrats, casting a shadow over his prospects for re-election in November 2012.
Media reports have put the size of Obama's jobs package at upward of $300 billion, with CNN quoting sources as saying it could top $400 billion. The White House would not confirm the reports.
"It's a major leadership moment for Obama," said Terry Madonna, a political scientist at Franklin and Marshall College in Lancaster, Pennsylvania. "He's running out of months before voters settle in on whether his presidency has failed."
An NBC/Wall Street Journal poll this week showed Obama was no longer the favorite to win next year.
The White House said Obama will describe in stark terms the difficulties the U.S. economy faces and argue Washington must do all it can to help the labor market recover -- a message he will press throughout the autumn as the 2012 race heats up.
White House senior adviser Valerie Jarrett told Reuters Insider that Thursday's speech was designed to encourage "shared responsibility" for the economy's woes.
"It's not just up to the president. It's up to Congress, it's up to the business community, it's up to the American people. Everyone has to get involved in this," she said.
Obama's goal is to get legislation passed this year to make a dent in unemployment by the spring. To bolster his chances for re-election, he needs to be able to point to economic improvement by the middle of next year.
The bruising battle in July over the U.S. government's debt levels, which led to a ratings downgrade by Standard & Poor's, highlighted the wide differences between Obama's Democrats and Republicans who control the House of Representatives.
Republicans see the 2009 stimulus package as wasteful and want immediate cuts to the deficit. Democrats say long-term deficits must be trimmed but the economy needs a fiscal boost.
The White House has said the jobs package will be paid for with future cuts but has not offered details.
Obama will urge a congressional "super committee" that convened on Thursday for the first time to find more than $1.2 trillion in budget savings but not unveil his suggestions until next week or later.
House Republican leaders John Boehner and Eric Cantor have signaled they were open to some infrastructure spending and to a program Obama will pitch to help train unemployed workers.
But Mitch McConnell, the top Republican in the Senate, said the president's readiness to accuse critics of being overly partisan was a political smoke-screen.
"This isn't a jobs plan, it's a re-election plan," he said.
Senate Democratic Leader Harry Reid said Republicans also had their eyes squarely on the 2012 vote.
"The other side seems convinced that a failing economy is good Republican politics. They think if they kill every jobs bill and stall every effort to revive the economy, President Obama will lose," Reid said. "Republicans aiming at the president have caught innocent Americans in the crossfire."