Bloomberg News

Obama Says Jobs Proposal Would ‘Jump Start’ Economic Growth

September 26, 2011

(Updates with Obama remarks at fundraiser in last two paragraphs.)

Sept. 26 (Bloomberg) -- President Barack Obama said his $447 billion jobs proposal will give the U.S. economy the “jump start” it needs to revive job growth.

Answering questions at a forum organized with LinkedIn Corp., the social and business networking website in Mountain View, California, Obama said the nation can’t afford to wait until the presidential and congressional elections next year to act on boosting growth.

He cited forecasts from independent economists that say the plan to cut payroll taxes for workers and employers, spend money on infrastructure repairs and give aid to states to stem teacher layoffs would add as much as 2 percentage points to economic growth next year and 1.9 million jobs.

“It’s the right step to take right now,” Obama said of the proposal he announced earlier this month.

Obama is on a three-day swing through Washington state, California and Colorado to raise money for his re-election campaign and promote his package of infrastructure spending, payroll tax cuts and other steps to boost the economy and reduce the 9.1 percent unemployment rate.

The president is seeking to revive enthusiasm among his core supporters and draw support from independents as he builds toward his 2012 campaign.

Campaign Issue

The economy will be the top issue for voters, and Obama is confronting persistently high unemployment and sluggish growth. The White House Office of Management and Budget forecast in August that the economy will expand 2.6 percent next year with the jobless rate averaging 9 percent. That didn’t take into account the impact of the jobs plan.

Employment was the main topic of questions from the audience at the Computer History Museum in Mountain View. Several of the questioners said they had recently found jobs after periods of unemployment or were still looking for work.

“We’ve got a short-term challenge, which is how do we put people back to work right now,” Obama said. The tax cuts and spending proposals in his jobs package “can have ripple effects and help the economy take off.”

Republicans, including House Speaker John Boehner of Ohio, have said they oppose the spending proposals in Obama’s plan and have questioned the value for job creation of the payroll tax cuts he’s proposing.

Taxes and Spending

The payroll-tax cuts, the centerpiece of the plan, cover the first $106,800 in earnings and are evenly split between employers and employees. Obama would reduce the portion paid by workers next year to 3.1 percent from 6.2 percent. The rate had been cut 2 percentage points under the terms of a tax deal reached last year, which is set to expire Dec. 31.

The package also would include a $105 billion infrastructure proposal for school modernization, transportation projects and rehabilitation of vacant properties, as well as $35 billion in state aid to save teachers’ jobs.

Obama also promoted his proposal for raising taxes on the wealthiest taxpayers by letting the rate cuts passed during former President George W. Bush’s administration expire, and increasing levies on those with incomes of $1 million or more.

The rates would return to those in the 1990s, when Democrat Bill Clinton was president, a period in which “the rich got richer, the middle class expanded, people rose out of poverty, because everybody was doing well,” Obama said.

Impact of Europe

The president said the difficulties in the U.S. reflect what is happening in the global economy. The financial crisis brought on by the European debt crisis “is scaring the world,” he said.

European governments are “trying to take responsible actions, but those actions haven’t been quite as quick as they need to be,” Obama said.

As European officials discussed plans to tame the 18-month debt crisis, the Standard & Poor’s 500 Index jumped 2.3 percent to 1,162.93 according to preliminary closing figures at 4 p.m. in New York. Ten-year U.S. Treasury note yields increased six basis points to 1.90 percent, rising from near a record low.

Of nine stops on Obama’s three-day trip, seven are devoted to raising money. The campaign is seeking to raise at least $4 million before a Sept. 30 deadline to file campaign finance reports.

Obama left Mountain View for a fundraiser in San Diego at the home of Mason Phelps, an ex-Marine who is a local philanthropist and art collector. The president warned supporters that the 2012 campaign would be difficult.

Voters are “frustrated” because of the economy, he said, and they’ve “got to be convinced, got to be persuaded, and I can’t do it alone. You guys are my ambassadors, my advocates, my shock troops.”

He’s also scheduled two more campaign events in Los Angeles tonight. He spoke to donors last yesterday in the Seattle area and in Silicon Valley.

The trip marks Obama’s 10th stop in California, his fourth in Colorado and third in Washington, since becoming president in January 2009.

--Editors: Joe Sobczyk, Robin Meszoly

To contact the reporters on this story: Roger Runningen in Mountain View, California, at rrunningen@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.


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