FACTBOX-Obama weighs mix of ideas for U.S. jobs plan

Tue Aug 30, 2011 6:00pm EDT

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Aug 30 (Reuters) - U.S. President Barack Obama, facing sliding approval ratings amid fears the economy could fall back into recession, is crafting a jobs package he will unveil next week. [ID:nN1E77T0M8]

The economy's woes have clouded Obama's prospects for re-election in 2012. He has come under fire from some Democratic allies who would like to see him take bolder steps to reduce the 9.1 percent U.S. unemployment rate and revive the sluggish economic growth.

White House officials are considering a mix of measures, some of which could clear the Republican-controlled House of Representatives while others could face greater resistance.

Here are ideas the White House is reviewing:

INFRASTRUCTURE SPENDING

Programs to fund public-works projects, such as the repair of roads, bridges and school buildings, have strong support among Democrats. Obama has spoken publicly several times in the last few weeks of the need to upgrade infrastructure and put unemployed construction workers back to work.

Republicans contend such "Keynesian" spending initiatives have not helped the economy and point as evidence to the economy's weakness despite the $800 billion stimulus package Obama and Democrats enacted in 2009.

Liberal economists say the major shortcoming of the 2009 stimulus was that it was not large enough to make up for the gaping hole left in the economy as a result of the 2007-2009 financial crisis.

Infrastructure ideas would likely face an uphill battle in the U.S. Congress with Republicans threatening to block new spending initiatives. But Democrats believe that even if they do not pass, the proposals could prove popular with voters and could make for a strong campaign pitch in 2012.

TAX BREAKS FOR BUSINESSES

Tax breaks to encourage the hiring of new workers could garner greater bipartisan support than spending measures. The White House has a number of options for designing such a measure.

One option would be to provide tax credits for companies that add to their payrolls.

Alternatively, the administration could consider expanding the current payroll tax holiday for workers to also provide relief for employers.

HELP FOR STRUGGLING HOMEOWNERS

The administration has been working for weeks on how to put together a mortgage relief program to meet the needs of troubled borrowers. Obama's speech next week could include a nod to plans to strengthen the housing market by allowing a greater number of homeowners to take advantage of current low interest rates by refinancing, according to sources familiar with the matter. The refinancing initiative under consideration would broaden eligibility for refinancing for homeowners whose mortgages are backed by Fannie Mae (FNMA.OB), Freddie Mac (FMCC.OB) and the Federal Housing Administration.

Republicans would likely oppose plans for broader refinancings that involved taxpayer subsidies, either directly from the government or through Fannie Mae and Freddie Mac.

Some analysts say the administration might be able to implement a housing initiative through executive action but changes involving the mortgage giants would require approval by their regulator, Edward DeMarco, head of the Federal Housing Finance Agency.

EXTENSIONS OF PAYROLL TAX CUTS AND UNEMPLOYMENT INSURANCE

A payroll tax holiday for workers and extended unemployment benefits were enacted in a bipartisan package in December. Obama called earlier this year for a continuation of both measures through next year. The White House remains committed to the extension but congressional Republicans are lukewarm on the idea, with some saying the White House should focus on measures such as broad tax reform that would have a more lasting impact on the economy.

Macroeconomic Advisers, an economic consulting firm, estimates that extending the payroll tax holiday, emergency unemployment benefits and business expensing provisions through 2012 would boost employment by about 600,000 next year. (Reporting by Caren Bohan, Laura MacInnis, Alister Bull and Jason Lange; editing by Mohammad Zargham)

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