White House Faces Pressure on Jobs

Washington Post: Despite Stimulus Successes, More Action Sought from Some Congressional Democrats

(Washingtonpost.com)  This story was written by Neil Irwin, Lori Montgomery and Michael A. Fletcher.

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Eight months after enacting a massive economic stimulus package, the Obama administration is facing rising pressure from some congressional Democrats to move more aggressively to jump-start the moribund job market and try to spur a housing recovery.

For the lawmakers, the imperative is clear: to get the job market back on track before midterm congressional elections in November 2010. While mainstream economists credit the $787 billion stimulus package passed in February for helping stabilize the economy, the unemployment rate reached 9.8 percent in September and is widely forecast to keep rising in the coming months.

But the White House, which is juggling priorities -- including a health-care overhaul, big changes to financial regulation and a proposal to combat global warming -- is reluctant to take on another far-reaching task. And in a time of large budget deficits, administration officials are particularly eager not to do anything that would be characterized as another stimulus act or tagged as wasteful spending.

Many Democrats -- especially in the House -- favor moving swiftly to bolster the job market after they pass health-care legislation. The House has already voted to extend unemployment benefits, and the Senate may do so next week. Support is already building around a plan to extend an $8,000 tax credit for first-time home buyers, which was included in the first stimulus package but is slated to expire Nov. 30. And lawmakers are discussing a wide range of other ideas, including a tax credit for businesses that create jobs, additional tax incentives for businesses to invest in equipment, and a large package of new transportation projects.

"There are some initiatives that we must do," particularly extending unemployment insurance, House Speaker Nancy Pelosi (D-Calif.) told reporters Thursday. "What is it that we can afford? What works the fastest? We have to get those judgments," she said, adding that she will consult with economists in the coming weeks about which policies might best help.

Pelosi also said that extending the tax credit for first-time home buyers is "under consideration," as is whether to extend such a credit to other buyers.

The White House is moving cautiously, weighing proposals from Capitol Hill and beyond but disinclined to combine them into one broad, potentially expensive bill that would draw fire from Republicans, administration officials said. Rather, the administration wants to enact some policies through the regular budget process and avoid those that do not directly support the job market.

"It is a real balancing act between worrying about the job problem and making sure you are squeezing every job you can out of every dollar that is spent," said an administration official who spoke on the condition of anonymity to discuss ongoing deliberations. Administration officials said no decisions are imminent on what ideas President Obama will endorse, and they note that only about half the stimulus money has been spent.

Democratic leaders in Congress are struggling under the twin pressures of a rising jobless rate and a soaring federal budget deficit. The Congressional Budget Office reported this week that the deficit hit $1.4 trillion in the fiscal year that ended in September. Representing nearly 10 percent of the overall economy, the deficit is the highest since World War II. Polls show the public is increasingly concerned about the rising tide of red ink, particularly as lawmakers contemplate a vast and expensive restructuring of the nation's health-care system.

But many Democratic leaders in Congress tend to view joblessness as the more immediate political concern. The entire House and many senators will face voters next November, and some political analysts say Democrats stand a good chance of losing control of the lower house unless they develop a more effective plan for creating jobs.

"We're certainly myopically focused on getting health care done. But at the same time, this caucus and the leadership are focused on job creation and what we need to do to put Americans back to work," said Rep. John B. Larson (Conn.), the No. 3 Democrat in the House, who has been calling publicly for another big package of transportation spending. "Jobs is uppermost in our minds."

On Thursday, Rep. Charles B. Rangel (D-N.Y.), the chairman of the tax-writing Ways and Means Committee, endorsed an extension of the home-buyer credit, saying, "There's no question, I think it should be extended." But Rangel said it would be "too expensive" to make the credit permanent or offer it to all home buyers, as some have suggested. Democratic aides said extending the credit would cost more than $1 billion per month.

Republicans, who have pilloried the administration for ongoing job-market woes despite the previous stimulus package, argued that any new stimulus package should focus on tax cuts.

"I think everyone knows that American families and small businesses continue to struggle," said House Minority Leader John A. Boehner (Ohio). "These high unemployment rates are not coming down. The stimulus is not working. And some of the policies that are continuing to be promoted here are not going to help the situation; they are going to make it worse.

The difficulty lawmakers face in enacting new spending is reflected in the bickering over a plan to extend emergency unemployment benefits for another three months -- an idea that many independent economists consider a "no-brainer," as IHS Global Insight chief financial economist Brian Bethune put it.

The House approved a bill to extend benefits in states where the jobless rate is 8.5 percent or higher two weeks ago, but the measure has since faltered in the Senate. On Thursday, Senate Democrats resolved a dispute over how broadly to distribute the benefits, offering a $2.4 billion plan that would grant up to 14 additional weeks of benefits to workers in all 50 states while offering up to 20 additional weeks to jobless workers in the hardest-hit states. The measure would be fully paid for by extending the federal unemployment tax through June 2011.

Republicans objected to efforts to speed the bill to a vote in the full Senate, however. And while Senate Minority Leader Mitch McConnell (R-Ky.) has said that Congress should act to extend unemployment benefits, he has questioned the need for broader spending on the economy.

"When you get into the very high levels of unemployment we'll be struggling with next year, not extending benefits threatens to undermine not only the spending of households under that stress, but the very fragile confidence of everyone else," said Mark Zandi, chief economist of Moody's Economy.com, who was consulted by lawmakers as they crafted the original stimulus bill.

Another open question is whether to extend the $8,000 tax credit for first-time home buyers. The program is widely credited with helping the housing market stabilize by driving up existing-home sales, home construction and housing prices in recent months.

And that has spinoff benefits: People buying a house tend to spend money on furniture and upgrades, and higher home prices make people feel wealthier and reduce losses by banks on foreclosures. On the other hand, the program has been expensive, and its benefits accrue to people who are already affluent enough to buy a home.

Meanwhile, liberal economists are urging Democrats to consider public-works programs and another round of aid to states, including many that are facing budget cuts projected to cost 700,000 jobs over the next two years. "States either have to raise taxes or cut spending. And when they cut spending, they lay people off and buy fewer products and services from the private sector," said Ross Eisenbrey, vice president of the Economic Policy Institute, a labor-oriented research organization.

Rep. Chris Van Hollen (D-Md.), who leads the campaign committee tasked with electing Democrats to the House, said there's no consensus within his party about how far to go beyond the initial stimulus package.

"If the assessment is the economy is picking up steam, you would want to continue to do the safety-net stuff, but you would not want to get into another big package that was not paid for," he said. "But if you determined the economy was not improving as expected, then you would consider the other option."

While White House officials say they have yet to settle on a strategy, they add that economic problems will continue until unemployment falls to more acceptable levels.

"The president is happy that GDP is growing," said a senior official, who spoke on the condition of anonymity to discuss the internal deliberations. "But he says unless we see some serious job creation, we are nowhere near out of the woods."

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[danberg777]

The industrail base has been destroyed by the two party system we keep electing. 7 million jobs lost which will not come back with republicans and democrates in power. Their to beholding to the 50 thousand business lobbists that demand free trade, not fair trade. No other country has let free trade destory itself like we have. One example, South Korea exports 700,000 cars a year to America, but only allow us to export 7,000 cars to them! As i remember, life was great growing up from the 50's through the 80's without this so called free trade. If you believe in free trade get ready for even greater job losses and competing with workers who make 2-3 dollars an hour.
With jobs being exported everyday, our leaders allow an open border with Mexico to flood our devastated job market with their citizens! The estimated 20 million illegal aliens competing for any job or social service your familiy may need. Mexico has a 47 consulars in almost every state, why? Ted Kennedy, in 1986, promised no more amnesties and our borders would be secured. Since then we've had 7 amnesties for a total of about 5-6 million illegals. Now with our border still wide open we have 20 million more illegal aliens, 75% don't have a high school education. Mexico needs to deal with it own over population, poverty, illiteracy, crime, not the American tax payer. Do not allow another amnesty to happen for the sake of your families, because another hord will cross the border looking for their amnesty!

Dan Bergstrom
Seattle, Wa...

[Mkw789]

The economy will bounce back. Government spending created many jobs in the Great Depression, Hoover Dam for example. Some paint that as socialism, others as a wise public investment -- found a cool site; Balkingpoints ; incredible satellite view of earth

[mary-miami]

All new programs need time to go into effect and get the help out to people in need. President Obama is a good leader who is trying to help the working class. He has alot of work to do clearing up this republican caused Depression.

[frank78069]

If you are one of the unemployed like me that has run out of benefits please give our friend Senator Kyl from Arizona a call and let him know that holding up this bill is making children go to bed hungry. He states he "hasn't had time to read it" so he decided to block it. Here is his number: 202-224-4521

[hologram5]

With the GDP at an all time low and more and more jobs moving overseas the unemployment rate will continue to rise until we start manufacturing more goods here in the USA. Get real and be honest. We are screwed.

[Soapm]

And the reason manufacturing and other jobs are moving overseas is because of the changes the Republicans made to the tax code which exempts profits corporations make off shore. We need to end those deductions before there will be any incentive for a corporation to manufacture in this country again. Until then, we need to get used to Chinese products.

[gramto8]

I wish I was physically able to work. With all my health problems, no one would hire me, even if jobs were plentiful.

I could really use the money right now. GA has decided to take away monies that they usually return to counties to assist with property taxes. Therefore, my tax bill is almost five times as high this year as last. Granted it was quite low last year, and most people would consider this year's a blessing, but to someone on a very limited fixed income the increase is financially damning.

[stuart-johns2]

Many are in your position but that has been going on for ages. Counties raise their tax rates to basically satisfy the over compensated executives of the county.

Just as many Americans are living beyond their means so are counties. The only difference is when the county is hurting, it raises property taxes but the average homeowner's income does not raise proportionately.

The homeowner loses. Welcome to politics and the worst of capitalism.

[sjc_1]

The Department of Energy is starting programs in renewable energy and other areas that will create longer term jobs. They are the projects that have no had the money for infrastructure in water, roads, schools and other areas that are starting. It takes a while for all this to flow through the system.

Back in 1982-83, when unemployment was over 10%, the jobs did not come back right away. A lot of that had to do with high interest rates to stop inflation, but not a multi trillion dollar mess in the banking industry. It will take a while and people have to do what they need to do to get through this. They have done this before and they can do this again. Once we get a managed economic system, we can work towards eliminating recessions once and for all.

[Jim Harmon]

From the article:
"But the White House, which is juggling priorities -- including a health-care overhaul, big changes to financial regulation and a proposal to combat global warming -- is reluctant to take on another far-reaching task."

It seems to me that in order to finance all the other programs that President Obama wants to implement that it would be in his best interest to have as many people PAYING taxes as opposed to replying upon tax money to put food on their tables.

Re-employment should be his Number One goal. Once this is accomplished he can turn his attention to other far less important, far less imminent problems.

[lmartink]

For over 30 years, the Presidential Administrations, and the Congress have permitted and encouraged job exports. Thirty years. Beginning with Ronald Reagan, and continuing under Bill Clinton. And of course the American pulblic was oblivious to impending disaster, as usual.

And now with the barn door rotting and falling off of its hinges after being wide open for so long, they're concerned about jobs! Gimme a break, please?

[Soapm]

The current stimulus is working as planned and needs to be given more time. We just experienced the worst recession since the great depression. During the great depression unemployment reached 25% and it lasted over 10 years. When the stimulus was passed we were loosing over 700K jobs per month. We didn't get in this mess over night and there is no silver bullet to get us out.

Tax cuts (which WERE in this stimulus) alone wouldn't have done this well this fast and making the Bush tax cuts permanent made no sense since they were in effect when we got in this mess, they are in effect now and here we are...