Obama challenges Congress to pass jobs plan

WASHINGTON – With the nation verging on renewed recession, President Barack Obama urged a divided Congress on Thursday night to back his new $447 billion jobs package, which he promised would give a “jolt to an economy that has stalled.”

The plan includes tax breaks for employees and companies that hire the unemployed, programs to help cities and towns retain teachers, firefighters and police officers, and money to rehab vacant and foreclosed homes. It also calls for $50 billion to improve transportation and $10 billion toward a public-private “infrastructure bank.”

“The people of this country work hard to meet their responsibilities,” Obama said. “The question tonight is whether we’ll meet ours. The question is whether in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy.”

The speech came as a sluggish job market, financial turbulence in Europe and plummeting consumer confidence have sent the administration and lawmakers reeling for ways to pump momentum into the economy.

Obama said his plan would put more people back to work and “more money in the pockets of those who are working” by creating jobs for construction workers and veterans returning from the wars in Iraq and Afghanistan. And it would mean a tax break for companies who hire new workers, and a payroll tax break for both employees and their employers.

“It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and hire, there will be customers for their products and services,” he said. “You should pass this jobs plan right away.”

The proposal faces a steep climb in a deeply divided Congress. Republicans charge that overregulation and government spending is the cause of the economy’s problems, not the solution. Many criticized Obama’s proposal before he delivered it and sat stone-faced as he told them 17 times in a 33-minute speech to pass the proposal.

“Just look at Europe today. There is a limit to what big government policies can do,” said Cathy McMorris Rodgers, R-Wash., vice chairwoman of the House Republican Conference. “And here in America we need to change course.”

Still, House Speaker John Boehner, R-Ohio – who chose not to stage a televised Republican response to the speech – said Obama’s proposals “merit consideration.”

“It’s my hope that we can work together to end the uncertainty facing families and small businesses, and create a better environment for long-term economic growth and private-sector job creation,” he said in a statement.

Senate Majority Leader Harry Reid, D-Nev., called Obama’s ideas a “common-sense bipartisan approach,” and he pointed out that Republicans have supported some of the ideas in the past.

But now, Reid said, “Republicans made it clear they were more interested in pursuing a political agenda than a jobs agenda.”

Republicans “aiming at the president caught innocent Americans in the crossfire,” he said.

Mark Zandi, the prominent chief economist for forecaster Moody’s Analytics, told McClatchy that Obama’s jobs plan, if approved, would make a big difference.

“The president’s plan would provide a meaningful boost to the economy and job market in 2012,” Zandi concluded. “I expect the plan to add 2 percentage points to real GDP growth and 1.9 million payroll jobs, and reduce unemployment by a percentage point.”

The biggest contributor to job growth next year under the Obama plan would be extending the payroll tax holiday for workers, which Zandi estimates would add 750,000 jobs. The portion that is waived for employers would add another 300,000 jobs, he said. Infrastructure spending could add 400,000 jobs.

However, Zandi said the odds are not good for Congress passing anything beyond an extension of the payroll tax holiday.

Obama noted the infrastructure bank to promote more government and private-sector spending on roads, bridges and other transportation needs was proposed by “a Texas Republican and a Massachusetts Democrat” and has the support of both the U.S. Chamber of Commerce and the AFL-CIO.

Some analysts welcomed the proposal.

“The idea of finding the right public-private partnership is a good one,” said Michael Spence, an economics professor at New York University and a fellow at the Council on Foreign Relations. “I think it is an entirely positive direction.”

Others said it wouldn’t work.

“The infrastructure bank model that is being promoted by President Obama is all smoke and mirrors and continues to funnel taxpayer dollars to fund projects in a vain attempt to stimulate the economy in the short term without accounting for the long-term costs,” Jason Fichtner, a policy researcher at George Mason University’s Mercatus Center, said in a statement.

Obama didn’t put a jobs total on his proposal. Senior administration officials who briefed reporters before the speech declined to say how many jobs they expected the proposal could create, saying only that it would “indisputably add to economic growth and job creation.”

They suggested that simply passing the plan alone would give a shaky economy a boost of confidence that Washington can work – just a month after a ratings agency downgraded U.S. debt in the wake of a bitterly partisan battle over raising the nation’s debt ceiling that demoralized the nation.

Under pressure from Democrats and labor unions to deliver a bold package of relief, Obama nevertheless underscored that many of his proposals have enjoyed bipartisan support.

“There should be nothing controversial about this piece of legislation,” he said. “Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans – including many who sit here tonight.”

For weeks Obama has suggested that he’ll look to turn Republican opposition on its head by insisting Congress is the stumbling block to turning around the economy.

He vowed to take his message “to every corner of this country.” And he’s not wasting time: He’s scheduled this morning to talk up his big new jobs plan at the University of Richmond – in Republican House Majority Leader Eric Cantor’s hometown. And on Tuesday he heads to Columbus, Ohio, Boehner’s state, to keep the pressure on there. Virginia and Ohio are expected to be key swing states in next year’s presidential election.

Administration officials said Obama soon will also offer a detailed deficit reduction plan to fully pay for the package.

“Everything in this bill will be paid for,” Obama said. “Everything.”