Afghanistan was Tuesday. Now, what to do about jobs?

McClatchy NewspapersDecember 3, 2009 

WASHINGTON — With the jobless rate rising and his approval ratings sinking, President Barack Obama hosted academics and leaders of business and labor at a White House jobs summit Thursday, seeking advice on how to boost employment.

Down Pennsylvania Avenue, House Speaker Nancy Pelosi, D-Calif., held a Capitol Hill news conference to announce new jobs legislation funded partly by unused taxpayer bailout money that had been designated for banks. She also vaguely discussed a possible tax on financial transactions, suggesting that it wouldn't be onerous.

Democrats want additional federal spending to create jobs and aid states, which are struggling to maintain social services after the deepest downturn since the Great Depression. Experts predict that state governments alone could slash about 900,000 more jobs because of falling tax revenues if they get no more help from Washington.

"There's no question that it is difficult out there right now," Obama told attendees at the close of the summit. "But we also heard some exciting ideas and proposals for how we can spur hiring today and lay the groundwork for sustainable economic growth in the future."

Republicans dismissed the summit as a public relations ploy.

The summit involved six breakout sessions to inform the White House on ways to create more jobs. Attendees called for everything from lower corporate taxes to trade protection to government loans for smaller firms.

"Given all the things that are swirling around, I thought it was important for the American people to see their president focused on jobs. And he really was engaged in the discussion," said attendee Alan Blinder, a Princeton University economist and former vice chairman of the Federal Reserve.

The White House gathering came a day before the Labor Department releases November unemployment statistics. The administration signaled Thursday that it expects the 10.2 percent unemployment rate to rise further on Friday.

Many mainstream economists fear that the jobless rate could peak at 11 percent or higher next year as the economy grows at a pace that's insufficient to reduce the disquieting jobless numbers significantly. Absent additional government spending, many fear that the economy could slide back into recession late next year.

Regardless of the causes, Obama already is paying a political price for the rise in unemployment on his watch. That increase happened despite his $787 billion stimulus package and promise upon taking office to keep the jobless rate in single digits. Just 40 percent of Americans approve of how he's handling the jobs crisis, according to a recent Gallup survey, while 55 percent disapprove.

That's helping to drag down the president's overall approval numbers, which average 50 percent in recent polls.

In response, Obama travels Friday to blue-collar Allentown, Pa., to tout his efforts to reverse what's now being called the Great Recession. It's the first of a series of such visits to heartland America in which the president will try to reconnect with voters. Obama also will give a speech on the economy Tuesday at the Brookings Institution, a center-left research center in Washington.

The rising jobless numbers and falling poll numbers scare Democrats in Congress, who will face voters next year when the entire House of Representatives and a third of the Senate is up for re-election.

Many voters are angry that big banks got a taxpayer bailout and ask why not the same for them, notwithstanding the massive federal aid to states and extension of unemployment benefits.

That explains Pelosi's push for a new jobs bill.

Her bill would include infrastructure spending and help for small business, at a cost of $60 billion to $70 billion, paid for largely by money from the Troubled Asset Relief Program. A separate bill would include extending unemployment insurance and other emergency needs, and would add to the federal budget deficit. Aid to states and help to create public-sector jobs also are being considered; it's not clear where that funding would come from.

Republicans scoffed at Pelosi's plan, saying the taxpayer money that banks are returning now should pay down the deficit instead.

"This idea that we're going to take this ... money that's being paid back to the government and then turn around and spend it on useless government programs is ... a very big mistake," said House Republican leader John Boehner of Ohio.

To help pay for the jobs bill, Pelosi suggested a tax on financial transactions.

"Because it is really a source of revenue that has really minimal impact on the transaction, but a tremendous impact on helping us meet our needs," she said. "I think there would be a market for it among the American people, to say that we are all participating in the economic prosperity of our country and we are all pitching in to continue that prosperity."

The Financial Services Roundtable, which represents big financial firms, frowned on the idea.

"Nearly every American would be impacted by a new transaction tax, no matter how small it is," Steve Bartlett, the president of the roundtable, said in a statement minutes after Pelosi's news conference, adding that the tax "would erect a roadblock" for capital flowing through the U.S. economy.

(Steven Thomma contributed to this article.)

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