THE ECONOMY : Obama focuses on jobs : White House summit will weigh plans to boost employment.
President Obama will convene a White House summit early next month to explore ways to reverse the soaring unemployment rate -- and there won’t be any shortage of ideas.
Economists and lawmakers hope that such proposals as tax breaks for companies that add workers, tax cuts for small businesses and more government highway construction will get renewed attention after Obama’s call Thursday for new ways to reverse job losses.
But the administration and its allies in Congress are facing another shortage -- time.
Economic and political concerns are rising after the unemployment rate hit 10.2% last month, reaching double digits for the first time in 26 years. With congressional midterm elections looming next year and thousands more jobs being lost each week, Washington must act quickly to get new programs in place.
Addressing those worries before departing for Asia on Thursday, Obama said he was open to “any demonstrably good idea” to stimulate job creation.
“We all know that there are limits to what government can and should do, even during such difficult times,” he said, alluding to the concerns about the soaring budget deficit. “But we have an obligation to consider every additional, responsible step that we can to encourage and accelerate job creation in this country.”
Obama said he would gather chief executives, small-business owners, economists, labor leaders and others to discuss ways to create jobs and grow the economy. The move comes as Senate Majority Leader Harry Reid (D-Nev.) told colleagues this week that he planned to push a job-creation bill in the coming weeks, as soon as the Senate finished debating and voting on healthcare legislation.
The jobless rate has continued to climb even as gross domestic product, the value of all goods and services produced in the country, is growing robustly again. So reducing the rate is a “critical imperative,” Sen. Jack Reed (D-R.I.) said.
“The recovery for the American family is not measured in GDP,” he said. “It’s measured in jobs.”
Reed has been pushing legislation to expand work-share programs, which exist in California and 16 other states. The initiatives entice companies to cut workers’ hours instead of laying them off, using a percentage of the unemployment benefits the workers would have claimed to make up the difference in wages.
It’s one of several ideas floating around Washington in recent months to address unemployment directly.
Sen. Russell D. Feingold (D-Wis.) is drafting a bill to provide a job-creation tax credit, based on a proposal by the think tank Economic Policy Institute. Lawmakers from steel-producing states have pressed for accelerated passage of a new multiyear transportation bill to build highways and other projects. And House Republican leaders continue to push for a package of tax cuts, including one that would allow small businesses to deduct up to 20% of their income to free up money to hire workers.
“What we need to do is to lower the price of risk to increase the confidence of those investors and small-business people who are going to be the job creators,” said Rep. Eric Cantor of Virginia, a leading House Republican, adding that mandates in the pending Democratic healthcare legislation are alarming business owners. “We also have to address the very real sense that small businesses are very nervous about committing capital right now.”
The administration has not publicly discussed any specific job creation initiatives. Obama said last week that he was looking at additional infrastructure spending, tax cuts for business, making more credit available to small businesses and increasing U.S. exports.
He noted Thursday that the economy was improving -- expanding at an annualized rate of 3.5% in the third quarter after a year of contraction -- and that job growth typically does not return immediately. The pace of job losses has slowed considerably since January. And the Labor Department reported Thursday that initial claims for unemployment benefits fell 12,000 to 502,000 last week, the lowest weekly total since January.
“Given the magnitude of the economic turmoil that we’ve experienced, employers are reluctant to hire,” Obama said. “Meanwhile, millions of Americans -- our friends, our neighbors, our family members -- are desperately searching for jobs. This is one of the great challenges that remains in our economy, a challenge that my administration is absolutely determined to meet.”
Feingold said he and his colleagues were discussing ways to help create jobs. “We all know that the healthcare bill is before us, but the jobs issue is at least as important,” he said.
He is advocating a two-year tax credit for businesses that hire new workers or add hours for current employees. Employers told him that such a measure would help “tip the balance” in favor of additional hires, Feingold said. The Economic Policy Institute estimated the credit, which would refund 15% of the cost of new wages next year and 10% in 2011, could create 5.1 million new jobs.
But short-term policies such as that don’t address the larger problem. The economy needs to grow at a much higher rate than 3.5% to create the millions of jobs needed to offset the losses suffered during the recession, said Martin Regalia, chief economist for the U.S. Chamber of Commerce.
“What everybody is hoping for is some sort of a panacea, and I don’t think there’s one out there,” said Regalia, whose organization is holding its own forum next week on the role of government in creating jobs. “We go back on things like reducing taxes, making the tax system more streamlined and less punitive in terms of the people who save and invest and put capital at risk.”
Administration officials and Democratic lawmakers are increasingly concerned as the jobless rate grows as they head into midterm elections next year. Democratic gubernatorial candidates in Virginia and New Jersey were defeated last week amid voters’ economic concerns, though Democrats won special House elections in California and New York.
“I don’t think there’s any question the voters are outraged at the seeming lack of concern on the part of the administration and the [Democratic congressional] majority about joblessness,” Cantor said.
Congress recently approved additional jobless benefits, particularly for those without jobs in California and other hard-hit states, and extended and expanded a tax credit for the purchase of homes that is often credited for helping to boost the real estate market. Obama made a point of signing the bill Nov. 6 after the Labor Department reported the October unemployment rate.
He summoned Reid and House Speaker Nancy Pelosi (D-San Francisco) to the White House last month to talk about job creation. And last week, Obama presided over a meeting of business leaders and other members of his Economic Recovery Advisory Board to find ways to lower unemployment.
House Minority Leader John A. Boehner (R-Ohio) said it was time for “immediate action,” not more meetings.
“Americans are asking, ‘Where are the jobs?’ but all they are getting from out-of-touch Washington Democrats is more spending, more debt and, now, more talk,” he said.