Barack Obama has promised to make job creation the priority during the remainder of his first term in office but supporters of the president who hope that he might announce bold new initiatives in a speech next week to curb unemployment are likely to be disappointed.
At the very least, the Democrat will probably call on Congress to extend unemployment benefits and a payroll tax cut to sustain consumer spending and invest in infrastructure construction to get people back to work.
Republicans, who control half the legislature, are unlikely to support further government action to stir growth even as members of the president’s party like to see just that. Without bipartisan support, another stimulus cannot be enacted.
The original $825 billion stimulus was passed when the jobless rate stood at 8.2 percent. With unemployment now over 9 percent — and much higher when including the millions of Americans who have only been able to find part-time work — Democrats want government to invest more in infrastructure and “green” technologies to create jobs.
Republicans, who won a majority in the House of Representatives in last fall’s midterm elections, blame the Obama Administration’s state activism for undermining business confidence and holding the recovery back. They insist that for the private sector to add jobs to the economy, government should do less, not more. Their emphases is on reducing public spending to balance the federal budget. Washington currently borrows more than $3 for every $10 it spends.
President Obama touted his original stimulus as a major investment in infrastructure, promising, in 2009, that it would “put Americans to work […] upgrading roads and railways as part of the largest investment in infrastructure since the creation of the Interstate Highway System half a century ago.” This summer, he had to admit that “shovel ready” was not as shovel ready as he had expected though. Major construction projects have yet to be undertaken and his intention to subsidize clean energy manufacturing and fuel efficient cars has drawn criticism from conservatives who would rather his administration allowed more drilling for oil and natural gas.
Whatever the president says, it will set the stage for a national debt about the future of the economy, one that is likely to define the 2012 general election.
In Congress, Democrats and Republicans will have to work together to identify at least $1.5 trillion in deficit reduction over the next ten years as part of this month’s agreement to raise the nation’s legal debt limit. Obama suggested in advance of that deal that he might be open to a “grand bargain” with Republicans that would reform public pension and health support programs — the biggest spending hurdles — as well as the federal tax code to boost revenue. Democrats are reluctant to change entitlements however and Republicans remain adamantly opposed to raising taxes, claiming that it would negatively impact investment and undercut a still fragile recovery.
Republican presidential hopefuls have already taken aim at Obama’s apparent lack of a clear growth strategy. Former China ambassador Jon Huntsman will unveil his own plan to create jobs in New Hampshire on Wednesday while frontrunner Mitt Romney is set to deliver a speech competing with the president’s next Tuesday. One day later, the Republican candidates debate in Florida.