November 4, 2011 / 3:31 PM / 6 years ago

Fears grow of gridlock on jobs, deficit

President Barack Obama speaks at Greenville County High School in Emporia, Virginia, October 18, 2011. REUTERS/Jason Reed

WASHINGTON (Reuters) - A series of messy budget showdowns earlier this year have left many in Washington pessimistic that politicians can deliver on two pressing priorities: taming surging deficits and spurring job growth.

Heading into the 2012 election year, both President Barack Obama and his Republican opponents face huge pressure to avoid the kind of standoffs that nearly forced a government shutdown and that led to a protracted debt-limit fight over the summer.

The Reuters Washington Summit next week, November 7-9, will offer a chance to hear from key players in the struggle, including budget policy experts, top lawmakers and tax lobbyists.

November’s Reuters/Ipsos poll underscored Americans’ clamor for action on both jobs and deficits but also divisions among voters about the remedies.

Nearly two-thirds of U.S. voters in the survey said a candidate’s efforts to reduce U.S. budget deficits will be “very important” to how they cast their ballots next year.

More than three-quarters -- 77 percent -- say that a candidate’s efforts to create jobs will be “very important” in their voting decision next year.

This could strengthen Obama’s hand as he tries to sell his $447 billion jobs package.

But Republicans’ strategy has been to liken that bill to Obama’s 2009 stimulus package, which proved unpopular. In the Reuters/Ipsos poll, 62 percent said stimulus bills approved by Congress have “just created debt.”

Alex Brill, a scholar at the American Enterprise Institute and a former aide to former President George W. Bush, expressed skepticism that Americans believe there is a “shot in the arm” or “magic pill” that would quickly revive the economy.

(See Reuters Washington Summit graphics at: r.reuters.com/gar74s )

Hints of improvement in the job market surfaced in Friday’s October employment report but economists say it would be hard for Obama to count on much of a decline in the unemployment rate before the November 2012 election.

U.S. employers boosted their payrolls by 80,000 last month, less than Wall Street economists had expected, but a drop in the jobless rate to a six-month low of 9.0 percent and upward revisions to prior months’ job gains signaled underlying strength.

Republicans have portrayed the $800 billion stimulus, passed by Obama and his Democratic allies in Congress in 2009, as a waste of money after it failed to halt a rise in the jobless rate. Democrats contend unemployment would have been even higher without it.

But Brill said it still might be possible for Obama to get some of his jobs initiatives passed by the end of the year, including potentially an extension of his payroll tax cuts if it is offset by future budget savings.

So far, Obama and House of Representatives Republicans are talking past each other when it comes to ideas for jobs growth. Obama is pushing tax credits and infrastructure spending, while Republicans are urging regulatory reform, smaller government and a streamlined tax code.

Meanwhile, the congressional “super committee” of Democratic and Republican lawmakers is showing no signs of visible progress on its task of finding at least $1.2 trillion in budget savings. Its deadline for reaching an agreement is just three weeks away.

Steny Hoyer, the No. 2 Democrat in the House of Representatives, has described expectations for the panel’s success as small, though the White House is urging people not to count out the super committee prematurely.

As concerns grow about the possibility of deadlock for the super committee, some are calling on Obama to step in and take a more active role in pushing the two sides toward a deal.

But many Democrats and even some Republicans don’t necessarily believe intervention by the White House would be particularly helpful at this time.

Neera Tanden, a former Obama aide who is now president of the Center for American Progress think tank, said the 12 members of the super committee have a big stake in succeeding and don’t need prodding by the president.

Tanden also said the committee could actually benefit from the current low expectations. Any breakthrough would come as a welcome surprise to anxious consumers and to investors fretting over the crisis in Europe and the U.S. economy’s weakness.

“The minute the president starts talking about the super committee every day, or trying to pressure the super committee, he is going to create an expectation that something will happen or that it will have some greater impact than it otherwise would,” Tanden said.

“That would be reliving our nightmare from the summer, which would be exceedingly unfortunate,” she said, referring to last July’s debt-limit fight when hopes arose of a “grand bargain” on the deficit but that effort eventually fell apart.

Writing by Caren Bohan; Editing by Tim Dobbyn; follow us on twitter.com/reuters_summits

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