President Barack Obama is scheduled to confer today with U.S. Senate Democratic leaders on a strategy for getting a vote on a $447 billion jobs plan that he said would give the economy the “jolt” it needs to spark hiring.
With the recovery being dragged down by the European debt crisis, Obama argued that the package of tax cuts and spending is needed to “guard against another downturn.”
“Any senator out there who’s thinking about voting against this jobs bill, when it comes up for a vote, needs to explain exactly why they would oppose something that we know would improve our economic situation at such an urgent time,” Obama said at a White House news conference yesterday.
He also said he is “comfortable” with a proposal by Senate Majority Leader Harry Reid to impose a surtax of 5.6 percent on people earning at least $1 million to generate about $450 billion to pay for his plan.
Obama’s proposal faces hurdles in the House, where Republicans hold the majority and oppose the tax increases in the plan, and in the Senate, where it will take 60 votes to end efforts to obstruct it and Democrats have just 53 seats. Some of those Democrats also are balking at the tax provisions intended to offset the cost.
Reid scheduled a test vote on bringing up Obama’s plan in the Senate for the evening of Oct. 11.
Sluggish U.S. economic growth and an unemployment rate that has been stuck at about 9 percent will be top issues next year as Obama faces re-election.
The timing for bringing the jobs measure up for debate was one of the topics on the agenda for Obama’s meeting scheduled for this morning with Reid of Nevada and the other three top Senate Democrats, Dick Durbin of Illinois, Charles Schumer of New York and Patty Murray of Washington. Reid is seeking to bring legislation to the floor as soon as next week.
In a news conference yesterday largely devoted to warnings about weakness in the U.S. economy, Obama challenged congressional Republicans to pass his jobs legislation.
“Congressional Republicans say one of the most important things we can do is cut taxes,” he said. “Then they should love this plan.”
Obama proposes to cut payroll taxes for workers and employers by half, extend jobless benefits, provide aid to states for schools and emergency workers and boost spending on public works projects such as roads and bridges. It also would provide tax breaks for employers to hire the unemployed.
To pay for it, he would cap itemized deductions for individuals earning more than $200,000 a year and couples earning more than $250,000. The plan would treat carried interest as ordinary income to raise $18 billion, end oil and gas subsidies for a savings of $40 billion and repeal accelerated depreciation on corporate jets to save $3 billion.
Republicans say some of Obama’s measures, such as payroll tax cuts, are worth considering, though they object to spending proposals and oppose raising taxes to pay for them.
Obama said he wouldn’t oppose Reid’s plan to pay for the package with a surtax on those making at least $1 million annually. The idea has been rejected by Republican lawmakers.
“I’m fine with the approach that they’re taking,” the president said of Senate Democrats. “We’ve always said that we would be open to a variety of ways to pay for it.”
Senator Ben Nelson, a Nebraska Democrat, said he would vote against considering the measure the way it’s being drafted by Democratic leaders.
“The more we talk about raising taxes to deal with issues here, the less action there will be on cutting spending,” he said. “I don’t see how I could support it.”
Obama said the U.S. economy is weaker than was expected at the start of the year. That’s because of the impact from the supply disruptions caused by the tsunami in Japan, higher oil prices stemming from uprisings in the Middle East and North Africa, the “debacle” of the prolonged debate over raising the debt ceiling and “most prominently” the situation in Europe, he said.
“The biggest headwind the American economy is facing right now is uncertainty about Europe,” Obama said. Concern about contagion from a default by Greece has put pressure on European banks, “and all that has put severe strain on the world financial system.”
He said he hopes that European leaders have “a very clear, concrete” plan for dealing with it when he meets with them at the Group of 20 nations summit Nov. 3-4 in Cannes, France.
Obama said he talks regularly with German Chancellor Angela Merkel and French President Nicolas Sarkozy and that European leaders recognize “the urgency of the situation.”
“I’m confident they want to get this done,” Obama said.
Obama also addressed his recent criticism of moves by some financial institutions to impose new fees on consumers, saying they are using regulations “as an excuse.” Bank of America Corp., the biggest U.S. lender, and rivals including JPMorgan Chase & Co., Wells Fargo & Co. and SunTrust Banks Inc., are rolling out charges for debit-card users as Dodd-Frank Act rules imposed by the Federal Reserve take effect this month.
“Basically, the argument they’ve made is, well you know what, this hidden fee was prohibited so we’ll find another fee to make up for it,” Obama said. “Now, they have that right, but it’s not a good practice. It’s not necessarily fair to consumers.”
He used the issue to urge the Senate to confirm his nominee to lead the Consumer Financial Protection Bureau, saying that providing the public with more transparency on prices and practices will put competitive pressure on financial institutions.
The anti-Wall Street protests that have spread from New York City to San Francisco are evidence of public frustration with the financial system, he said.
The protests “are giving voice to a more broad-based frustration about how our financial system works.”
Still, Obama defended the government rescue of U.S. banks, saying that “had we seen a financial collapse then, the damage to the American economy would have been even worse.” He said he has used “a lot of political capital” to keep banks afloat.