Faced with a stagnating economy, U.S. President Barack Obama intends to unveil a job creation plan and deficit reduction proposal shortly after Labor Day, Sept. 5.
The Obama job creation plan is expected to include proposals on middle-class tax cuts, new infrastructure spending, and ways to assist the long-term unemployed.
For now, the White House is withholding specifics, explaining that the details will be worked out in the days and weeks ahead. But the administration claims the plan will contain fresh ideas.
"I'll be putting forward a very specific plan to boost the economy, to create jobs and to control the deficit," President Obama said on Monday in a speech given on the first day of his Midwest bus tour. "And my attitude will be, 'Get it done.'"
It's not surprising that President Obama is now focusing more on economic issues. A weak economy and unemployment hovering above 9% represent the biggest obstacles to his re-election in 2012. No president in recent history has been re-elected with a jobless rate in excess of 9%.
The president has spent much of this week's bus tour talking about government actions that could boost the sluggish economy. Gross domestic product grew by just 0.4% in the first quarter and 1.3% in the second, well below healthy levels of 3% or higher.
The president said he would like to extend the 2% cut in the payroll tax that otherwise would expire at the end of 2011; that would put a few extra dollars in every worker's paycheck. He also wants to extend unemployment insurance benefits.
Another idea President Obama discussed was an "infrastructure bank," which would pool federal, state and private money to pay for roads and other projects and create construction jobs.
The approval of several issues pending in Congress – including patent reform and free trade agreements with Colombia, South Korea and Panama – also would give the economy a lift, the president said this week.
Another Swing at the Deficit
The other part of President Obama's September plan will tackle the nation's deficit spending. Those proposals will be directed largely at the 12-member congressional committee tasked with identifying at least $1.5 trillion in federal budget cuts over 10 years by Nov. 23.
Congress then has until Dec. 23 to approve the plan, or else a series of cuts in defense spending and other programs will automatically go into effect about a year from now – part of the agreement that resolved the debt ceiling crisis.
But White House officials say Obama's plan will seek cuts well beyond the committee's $1.5 trillion mandate. They could even go as high as the $3 trillion to $4 trillion that the president had worked out with House Speaker John Boehner, R-OH, in the so-called "grand bargain."
"We missed an opportunity a month ago when we could have dealt with our debt and deficit in a serious, balanced way," President Obama said in a CNN interview on Tuesday. "We're going to take one more run at Congress, and we're going to say to them, "Look, here is a comprehensive approach that gets our debt and deficits under control and also accelerates job growth right now.'"
Still, when President Obama uses the word "balanced," he means the spending cuts and revenue increases that he emphasized in his July 25 speech.
That will be a hard sell to Tea Party Republicans, whose utter rejection of any deficit reduction plan that includes revenue increases was a key complicating factor in the debt ceiling negotiations. The Tea Party will certainly dig in against any Obama job creation plan that calls for increased spending.
"If the president's proposals will just be once again … reflecting his belief that you simply spend more money to create more jobs, it won't work," Sen. Jerry Moran, R-KS, told Fox News. "It's how we got into the downgrade that we're in."
Standard & Poor's downgraded the credit rating of the United States to AA+ from AAA following the debt ceiling deal, citing the contentious political atmosphere as well as a lower-than-desired reduction in the size of the deficit.
In an Tuesday editorial in USA Today, two top Republican leaders, Speaker Boehner and Rep. Eric Cantor, R-VA, indicated the party as a whole would stand firm against any proposals by the president to increase revenue.
"The American people understand that Washington can't keep spending money it doesn't have," Boehner and Cantor wrote. "They want to see less government – not more taxes."
Democrats, of course, tend to hold a more favorable view of the government and what its role should be. Those philosophical differences will again shape the debate when President Obama's job creation plan-deficit reduction proposal reignites the budget battle in September.
With memories of this summer's fracas still fresh, President Obama at one point during his bus tour tried to steer the debate closer to the middle of the road.
"It's not either-or," the president said."It's a recognition that the prime driver of economic growth and jobs is going to be our people and the private sector and our businesses. But you know what, government can help."
News and Related Story Links:
- Money Morning:
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- Money Morning:
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- Money Morning:
The Debt-Ceiling Debate: The Death of the "Risk-Free" Investment
- Washington Post:
Obama to issue new proposals on job creation, debt reduction
- The Wall Street Journal:
President Weighs Asking Panel for Stimulus Measures
- Bloomberg News:
Obama Plans Package to Boost Economy
Obama to unveil economic plan in September speech
AP Source: Obama to Give Major Jobs Speech
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Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.