Bloomberg News

Obama to Propose Spending to Boost Jobs in Speech

February 10, 2013

U.S. President Barack Obama

U.S. President Barack Obama wants to move quickly on a package of domestic issues before Republicans and Democrats turn their attention to the 2014 mid-term elections, making it harder to advance major legislation. Photographer: Andrew Harrer/Bloomberg

President Barack Obama will use his State of the Union address this week to focus on job creation and the struggles of American families, marking a renewed emphasis on the economic issues that defined his first term.

The president will offer proposals for spending on infrastructure, clean energy and education, according to a senior official briefed on the speech. He will also stress the agenda laid out in his inauguration address, pushing Congress for action on immigration, gun control and climate change.

Obama previewed his Feb. 12 speech in remarks before House Democrats meeting in Virginia last week, where he advocated “an economy that works for everybody.”

“I’m going to be talking about making sure that we’re focused on job creation here in the United States of America,” he said.

Democrats and Republicans are targeting their post-election messages on the economy as the latest unemployment report shows the nation continues to only slowly create jobs. Payrolls rose 157,000 in January after accelerating more than previously estimated at the end of 2012, the Labor Department said on Feb. 1. The jobless rate increased to 7.9 percent from 7.8 percent.

The economy unexpectedly shrank in the fourth quarter at a 0.1 percent annual rate, restrained by a plunge in defense spending and dwindling inventory growth.

Obama is expected to use his address to push for immigration legislation that includes a pathway to citizenship for the country’s estimated 11 million undocumented workers and on gun-control proposals, including a ban on assault weapons and universal background checks for gun buyers.

Moving Quickly

The president wants to move quickly on a package of domestic issues before Republicans and Democrats turn their attention to the 2014 mid-term elections, making it harder to advance major legislation. A Washington Post-ABC News poll last month gave Republicans in Congress an approval rating of 24 percent, compared with a 37 percent rating for Democrats. Sixty percent of Americans have a favorable impression of Obama in the same poll.

Republicans are redoubling their own efforts on the economy. House Majority Leader Eric Cantor last week gave a speech designed to redirect his party to former President George W. Bush’s message of “compassionate conservatism” after a series of bitter standoffs with Democrats over debt and federal spending over the past two years drove down Republican approval ratings.

“We’ve got to be talking about helping folks,” Cantor, a Virginia Republican, said on NBC Television’s “Meet the Press” program this morning. “We have conservative principles that actually can work for their life.”

No Agreement

That doesn’t mean the two sides are close to agreeing on policy.

Obama and Republicans are locked in a standoff over how to avert $1.2 trillion in automatic spending cuts set to take effect on March 1 unless Congress acts to stop or replace them.

The president and congressional Democrats back an equal mix of revenue and alternative spending cuts to farm subsidies and other programs to replace the so-called sequester. Republicans are ruling out additional revenue increases.

If the reductions to both domestic and defense programs take effect, “the result could be a huge blow to middle-class families and our economy as a whole,” Obama said in his weekly radio address yesterday.

Cut Delay

Senate Democrats are close to proposing a $120 billion plan for a 10-month delay in the cuts, according to a Senate Democratic aide. The plan would set a minimum 30 percent effective tax rate for the highest earners, a provision known as the “Buffett Rule” after billionaire investor Warren Buffett. It would also deny companies the ability to deduct the costs of moving jobs and investments out of the U.S., the aide said.

On NBC, Cantor reiterated Republican opposition to increasing revenue by ending tax preferences for oil and gas companies and wealthy individuals.

“He just got his tax hike on the wealthy,” Cantor said of Obama. “You can’t in this town every three months raise taxes.”

Even so, Cantor signaled Republicans are unlikely to offer new legislation to avert sequestration. Last year, the House passed a bill to replace the reductions with curbs to entitlements and other programs including federal food stamps. “It’s up to the president, really, to act now,” said Cantor.

Tea Party

As Cantor and other Republican leaders want to emphasize the economy and jobs, the Tea Party wing of their party is committed to keeping the spotlight on the national debt.

“We are not getting close to scratching the surface of the problem,” Kentucky Senator Rand Paul, a Republican, said on CNN’s “State of the Union” program.

Paul, who will deliver a Tea Party response to Obama’s State of the Union address, said supporters want the large budget cuts called for in the sequester plus significantly more. “The sequester is a pittance,” he said.

Seeking Alternatives

Republicans prefer to find alternative spending cutbacks, including to Medicare providers and by reducing pension benefits for federal employees, said Cantor.

While the cuts loom, Obama has devoted the early weeks of his second term to the rest of his economic agenda, kicking off campaigns for stricter gun-control measures and to revamp immigration law.

A first step on immigration policy could be offering a road to citizenship for undocumented immigrants who came to the U.S. as children, said Cantor, without ruling out additional legislation aimed at a pathway for adults as well.

“These are children, who due to no fault of their own, were brought here,” Cantor said. “We’ve got a place all of us can come together, and that is the kids.”

Cantor was among 160 House Republicans who voted against such legislation in 2010 when it passed the House, then controlled by Democrats. That measure, known as the Dream Act, died in the Senate.

Climate Change

The 2010 legislation would have provided a way to citizenship for children of undocumented immigrants who came to the U.S. before age 16, stayed at least five years and earned a college degree or served in the military.

Another area Obama may concentrate on is climate change. The president’s mention of the need to address that concern in his inaugural speech raised expectations that he’ll spend political capital on environmental issues.

With many in Congress unwilling to take up the issue, Obama will use the power of the presidency to put new restrictions on industrial carbon emissions. The Environmental Protection Agency plans to move forward with regulations on new power plans and is considering limits for existing coal-fired plants.

To contact the reporters on this story: Lisa Lerer in Washington at llerer@bloomberg.net; Heidi Przybyla in Washington at hprzybyla@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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