Obama pressed to come out fighting over jobs

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A call for jobs at the US Chamber of Commerce

Barack Obama is being urged to abandon political pragmatism and state a bold defence of the government’s role in reducing unemployment, amid signs of internal divisions over the focus of the president’s highly anticipated speech about jobs.

The address, to be delivered shortly after the Labor Day holiday in early September, comes as the president faces an increasingly difficult re-election campaign in 2012, and deep frustration among voters about his handling of the economy. One recent Gallup poll showed Mr Obama in a statistical dead heat with nearly all of the top Republican contenders for president.

People who have been in talks with administration officials say there are competing views within the White House about how Mr Obama should use the jobs speech to revive his presidency and reset the debate in Washington, which for months has been focused on shrinking the size of government.

Critics on the left, including officials at influential think-tanks such as the Center for American Progress, charge that Mr Obama lost his political edge early in the year when he ceded ground to Republicans and their view that debt and deficit reduction were Americans’ top priority.

They argue that Mr Obama’s call for reform of expensive government programmes such as Medicare, the health insurance scheme for the elderly, and his boasts about the low levels of domestic spending his administration has achieved make it hard for the White House to sell an alternative message: that government will play a necessary role in jump-starting the flagging US economy.

The administration has shied away from this message for fear of alienating moderate voters.

Instead of simply trying to appear like the most reasonable man in Washington amid a crowd of irrational Republicans, they say Mr Obama must define his own agenda and not temper it in relation to his opponents.

Although the timing of the address has not yet been announced, it will immediately draw comparisons to a speech Mitt Romney, the former Massachusetts governor and Republican presidential candidate, is giving on jobs on September 6.

“We think the plan ought to be on the scale of the problem and shouldn’t be confined to what he thinks Congress would embrace,” says Michael Ettlinger, vice-president for economic policy at CAP. “I don’t think he has tested the boundaries of what is possible.”

Until now, Mr Obama’s job agenda has relied on a handful of ideas that have traditionally garnered Republican support in Congress, but are nevertheless facing gridlock on Capitol Hill, including a series of free-trade agreements and patent reform.

Economists at CAP said they believed Mr Obama’s jobs speech must be bold and include three proposals: an increase of at least $65bn on infrastructure spending, an aggressive plan to deal with housing foreclosures, and an injection of at least $13bn on energy efficiency, which they say would spur construction jobs.

Any infrastructure proposal should include incentives for private investors to shoulder some burden of the costs through loan guarantees and other initiatives, Mr Ettlinger says.

Yet all of those ideas – or, indeed, any call for increased government stimulus – are seen as politically impossible in Washington today given the intense opposition in the Republican-controlled House of Representatives to government spending or tax increases to fund such initiatives.

Democrats in Congress and Mr Obama are already facing an uphill battle to extend for one year a payroll tax cut that passed with bipartisan support last year because of Republican opposition. The tax cut benefits middle and low-income workers and costs about $112bn over 10 years.

The question facing the White House now is whether it is time for Mr Obama to ignore political reality and argue that such stimulus is necessary, and face the fierce backlash that would inevitably follow from Republicans. It is also unclear whether the president will use the speech to address deficit reduction.

“Apparently, there are two competing strategies: do what you believe and do what you think might pass,” says Andy Stern, a former labour leader who frequently advised Mr Obama in his first two years in office. “Are we going to put out a series of [old] ideas, or are we going to say: ‘I want to create 2m jobs and here’s what I would do, and here’s how I would pay for it’, and offer people a clear sense of choice?”

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