Obama Says Private Sector Must Lead in Creating Jobs (Update3)

Dec. 3 (Bloomberg) -- President Barack Obama said the private sector must take the lead in creating jobs as the U.S. economy recovers and that persistently high unemployment “cuts deep” for the millions out of work.

The president spoke at the opening of a White House forum on creating jobs that assembled a group of economists, union leaders and business executives such as Eric Schmidt, chief executive officer of Mountain View, California-based Google Inc. and Fred Smith of Memphis, Tennessee-based FedEx Corp.

“We cannot hang back and hope for the best when we’ve seen the kinds of job losses that we’ve seen over the last year,” Obama said. “What I’m interested in is taking action right now to help businesses create jobs right now, in the near term.”

With the nation’s unemployment rate at a 26-year high of 10.2 percent in October, the president is pivoting back to pocketbook issues two days after announcing a new Afghanistan war strategy. Federal Reserve policy makers predict the unemployment rate will range from 9.3 percent to 9.7 percent in next year’s fourth quarter, which may hurt Obama’s Democratic Party in the 2010 congressional elections.

Obama is scheduled to follow up with a talk about the economy in Allentown, Pennsylvania, tomorrow, the same day the Labor Department will report the jobless rate for November. On Dec. 8 he will give a speech on the economy in Washington.

The people Obama brought together today split into six working groups led by administration officials including Treasury Secretary Timothy Geithner, National Economic Council Director Lawrence Summers and Energy Secretary Steven Chu.

Strategy Discussions

The subjects for the smaller sessions include creating jobs through developing of alternative energy sources, rebuilding U.S. infrastructure and boosting exports.

Obama’s board of outside economic advisers, headed by former Federal Reserve Chairman Paul Volcker, is likely tomorrow to endorse incentives for people to make their homes more energy efficient and a federal infrastructure fund as ways to spur job creation, an administration official said.

In the discussion session on so-called green jobs, Obama said he’ll pursue an “aggressive agenda” on energy efficiency and weatherization. Those two areas “can have an immediate, rapid impact,” he said.

Such incentives would benefit home-improvement retailers such as Atlanta-based Home Depot Inc. and Lowe’s Cos., based in Mooresville, North Carolina.

Infrastructure Spending

In a separate discussion, the president also backed more spending on roads, bridges and other such projects that will both create jobs and repair the nation’s aging infrastructure.

“Everybody in this administration acknowledges the need for infrastructure investment,” Obama told participants.

Gerard Arpey, chairman and chief executive officer of American Airlines parent, Fort Worth, Texas-based AMR Corp., called on the administration to spend on improvements to the nation’s air traffic control system.

“The obstacle, of course, is funding,” Arpey said. “It’s infrastructure spending that could lead to jobs and a lot more efficient aviation system.”

Norfolk Southern Corp. Chairman and CEO Charles “Wick” Moorman told Obama that such spending also would help the U.S. keep up with foreign competitors, such as China.

Looming Crisis

“We have an infrastructure crisis looming in this country,” said Moorman, head of the fourth-largest U.S. railroad, based in Norfolk, Virginia. “What better way to fix it than to plow money out there for worthwhile projects?”

In a session focused on trade, Smith and Robert Iger, CEO of Burbank, California-based Walt Disney Co., told Summers that reducing the 35 percent corporate tax rate would make U.S. companies more competitive and boost exports.

“If you don’t change the corporate tax rate, if you don’t allow equipment and software to be expensed and if you don’t insist that we have open markets you can’t, in my opinion, be competitive in the export sector,” Smith said.

In the closing session, Obama said making more credit available, particularly for small businesses, is a priority for the administration.

“We are constantly looking for more ways that we can push the banks and the credit markets to get money into the hands of small and medium-sized business that create the majority of jobs,” Obama said.

Employment Woes

Companies represented at the form today included Dallas- based AT&T Inc., Chicago-based Boeing Co. and New York-based Pfizer Inc., and provide a snapshot of the nation’s employment woes, having cut more than 36,000 jobs this year, according to data compiled by Bloomberg.

Outside the White House gate, about 30 protesters gathered as the attendees arrived. Signs carried by the demonstrators included calls for more money to be spent on jobs rather than the military campaign in Afghanistan and slogans such as, “A job is a right.”

Obama earlier this year pushed through Congress a $787 billion economic stimulus package that his administration projected would hold unemployment below 8 percent.

An analysis by the nonpartisan Congressional Budget Office said the stimulus generated between 600,000 and 1.6 million jobs and, as unemployment rose, kept the rate between 0.3 and 0.9 percentage points lower than it would have been without the stimulus package.

Republican Roundtable

Republicans lawmakers held their own economic roundtable at the Capitol today, where House Minority Leader John Boehner of Ohio said “all the job-killing policies that are being offered by this administration and this Congress” are creating uncertainty for business. As a result, he said, companies aren’t hiring.

Republicans invited to the forum include Larry Lindsey, a head of the Council of Economic Advisers under former President George W. Bush, and Douglas Holtz-Eakin, a former director of the Congressional Budget Office and chief economic adviser to the 2008 Republican presidential candidate, Arizona Senator John McCain.

Boehner and other Republicans say the stimulus hasn’t created jobs while adding to a deficit that reached a record $1.4 trillion in the fiscal year that ended Sept. 30 and is projected to be $1.4 trillion again this year.

Obama conceded that the government’s “resources are limited” because of the budget deficit.

“We can’t make any ill-considered decisions right now,” he said. “We’re going to have to be surgical and we’re going to have to be creative.”

To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net; Edwin Chen in Washington at echen@bloomberg.net

To contact the editor responsible for this story: Jim Kirk at jkirk12@bloomberg.net