June 30, 2011 / 12:58 PM / 8 years ago

Analysis: Obama's jobs plan aimed at voters, not debt talks

WASHINGTON (Reuters) - President Barack Obama’s call for new job-creation measures won’t make it easier to reach a budget-cutting deal with Republicans in Congress, but it could make it easier for him to win reelection next year.

President Barack Obama delivers remarks at an event observing LGBT Pride month in the East Room of the White House in Washington June 29, 2011. REUTERS/Yuri Gripas

As the Democratic president pushes Congress to complete a deal that would avoid a potentially catastrophic debt default, Obama must balance the concerns of two very different groups: Republicans who want deep spending cuts and independent voters who are struggling to make headway in a sluggish economy.

Guess who got more sympathy on Wednesday at Obama’s first formal press conference since March? Hint: it wasn’t the group that he compared to his school-age children.

“Malia and Sasha generally finish their homework a day ahead of time. ... They don’t wait until the night before, they’re not pulling all-nighters. They’re 13 and 10. You know, Congress can do the same thing,” he said at a news conference.

Obama’s stance makes it more likely that Congress will be pulling all-nighters as an August 2 deadline for raising the debt ceiling approaches.

His call for new construction loans and an extended payroll-tax break would probably add hundreds of billions of dollars to budget deficits in the short term.

That makes it more difficult for negotiators to reach the $2 trillion plus dollars in deficit savings that will likely be needed for Congress to raise the $14.3 trillion debt limit before early August, when the Treasury Department says it will run out of money to cover the nation’s bills.

It’s possible that Obama has other numbers in mind. The U.S. Federal Reserve projects that the unemployment rate, now at 9.1. percent, will be around 8 percent when he comes up for reelection in November 2012. In recent decades, no president has been reelected with unemployment over 7.2 percent.

Neither job-creation proposal is new — Obama backed additional construction spending last year, and the White House floated a payroll-tax break extension several weeks ago. Senate Democrats last week called for both proposals to be included in the budget talks, right before they hit a standstill.


By touting the proposals under the bright lights of a White House press conference, Obama showed that he was more interested in advancing Democratic goals than reaching a quick resolution with Republicans, analysts said.

“Neither the Republicans nor the Democrats want to cut the deal early. Everyone has to have this Tony Award-winning performance that shows they have done everything they can to fight for their policies, fight for their principles before they can compromise,” said Ethan Siegal, an analyst with The Washington Exchange.

In vivid language, Obama contrasted the spending cuts that Republicans have proposed to food inspections and student loans with the tax breaks they want to protect for hedge-fund managers, corporate jet owners and other affluent types.

Obama’s performance marked “the strongest argument that Democrats have made in a while in the whole budget area,” ISI Group analyst Andy Laperriere said.

Obama said the job-creation efforts don’t necessarily have to be included in the deficit deal, but it’s hard to see how they could pass as a stand-alone bill.

Republicans say measures that would worsen deficits have no place in talks designed to reduce them. “This isn’t a negotiation — it’s parody,” Senate Republican Leader Mitch McConnell said before Obama’s news conference.

Republicans routinely refer to Obama’s 2009 stimulus effort as a “failure,” and they are eager to advance a jobs agenda of their own centered on deregulation, tax cuts and a repeal of Obama’s 2010 healthcare overhaul.

“Stimulus is still a four-letter word for Republicans,” MF Global analyst Chris Krueger said.

Even if they are doomed to failure, the job-creation proposals could serve as a negotiating chip to help Democrats win some of the $400 billion in revenue increases they want.

And any tax breaks that survive could come back to haunt Republicans in campaign commercials next fall.

“I think it would be hard for Republicans to stand there and say that the tax break for corporate jets is sufficiently important that ... that’s the reason we’re not going to come to a deal,” Obama said.

Additional reporting by Richard Cowan, Emily Stephenson and David Morgan; Editing by Paul Simao

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