Obama Weighs Spending to Stem Job Cuts Without Second Stimulus
The discussion of the initiatives, including a boost in transportation spending and an extension of an expiring tax credit for first-time homebuyers, comes as the White House is balancing rising concern about unemployment and a budget deficit the Congressional Budget Office estimates will total $1.6 trillion for 2009, and $1.4 trillion in 2010.
Administration officials have told allies in Congress that a broader transportation bill, and extensions of a homebuyer tax credit and unemployment benefits are all on the table, a Senate aide said.
Representative Chris Van Hollen of Maryland, who chairs the Democratic Congressional Campaign Committee that is tasked with holding the partys House majority in next years midterm elections, said additional transportation funding would be popular among Democratic lawmakers.
“If there was to be another round of stimulus, additional infrastructure would be at the top of the list,” Van Hollen said in an interview. Money for roads, transit and bridges would be a priority.
Contradictory Missions
In considering the measures, the administration has to reconcile two potentially contradictory missions: combating rising unemployment through government intervention and the need to hold deficits down.
White House Press Secretary Robert Gibbs yesterday highlighted those political sensitivities, saying there “were no plans” for a second stimulus like the $787 billion package passed earlier this year. Instead, he said, the administration is looking at “extensions” of existing programs.
“The economic team is certainly looking at and working on any way that we can create more jobs,” Gibbs said.
The items under consideration include an increase in infrastructure spending through expiring transportation legislation that Congress must reauthorize in the coming months, the Senate aide said, speaking on condition of anonymity.
Other steps being weighed include an extension of a tax credit of up to $8,000 for first-time homebuyers that is due to expire later this year, and a renewal of a tax benefit for net operating losses that would benefit small businesses, the aide said.
A Stimulus
The Obama administration isnt near a final decision on additional measures, said Jen Psaki, a White House spokeswoman.
“As they continue to explore the best options, any notion that we are any farther along than preliminary discussions about new proposals is wildly inaccurate,” she said.
The Labor Department reported last week that unemployment reached 9.8 percent in September, the highest level since 1983. Nonfarm payrolls dropped by 263,000, a steeper drop than economic forecasters had expected.
At the same time, the federal deficit has risen sharply because of this years stimulus package and bailouts for the banking industry, auto industry and Fannie Mae and Freddie Mac. While the Obama administration has pledged that a health-care overhaul it is pushing through Congress wont widen the deficit, it has stirred concerns among fiscal conservatives.
More Difficult
“More of a stimulus package is much more difficult at this point than it was in February,” said Julian Zelizer, a professor of public affairs at Princeton University in New Jersey. “The deficit can become a political straitjacket to the Democrats.”
Obama and his aides have stressed that they expect employment growth to lag in an economic recovery. They now confront rising joblessness as they move toward midterm elections in November 2010.