By Hans Nichols and Margaret Talev
Sept. 6 (Bloomberg) -- President Barack Obama
Congress for tax cuts that would exceed his past proposals as
well as some of the offerings from House Republicans to
strengthen his hand in talks on measures to boost the U.S.
economy, according to a person familiar with the discussions.
With Obama set to lay out his plans in a Sept. 8 address to
Congress, the administration is focusing on cuts targeted at
middle-income Americans to spur consumer spending, which
accounts for 70 percent of the economy
, said the person, who
spoke on condition of anonymity to discuss internal
In a speech to a union crowd in Detroit yesterday, Obama
said he would challenge Republicans on taxes.
“You say you’re the party of tax cuts?” Obama said before
the annual Metro Detroit Central Labor Council rally. “Well
then, prove you’ll fight just as hard for tax cuts for middle-
class families as you do for oil companies and the most affluent
Obama will unveil his new economic agenda as unemployment
remains at 9.1 percent more than two years after the recession’s
official end. The jobless rate and the sluggish recovery from
the worst recession
since the Great Depression will be central
issues as Obama runs for re-election next year. Republicans, who
control the U.S. House, have signaled resistance to new spending
that would add to the federal budget deficit.
Stalled on Jobs
Without new measures to boost hiring, Obama’s budget office
forecast last week that the unemployment rate would be little
changed in 2012, averaging 9 percent.
“With the unemployment rate stuck at such a high level,
the economy desperately needs help,” said Peter Orszag
director of Obama’s Office of Management Budget.
Whatever plan Obama settles on “will probably have to lean
heavily on tax cuts if it’s going to have a serious chance of
being enacted,” Orszag, vice chairman of global banking at
Citigroup Inc., said in an e-mail. “They should be coupled with
credible deficit reduction that is enacted now but doesn’t take
effect for some time.”
Obama also said in Detroit yesterday that spending on
infrastructure will be a major component of his plans to create
“We’ve got roads and bridges across this country that need
rebuilding,” Obama, 50, said. “We’ve got more than 1 million
unemployed construction workers ready to get dirty right now.
There is work to be done and there are workers ready to do it.
Labor’s on board, business is on board. We just need Congress to
get on board.”
The discussions about making bigger moves on taxes amount
to recognition by Obama’s political advisers that billions of
dollars in new infrastructure spending stands little chance of
winning approval from the Republican-controlled House, the
The person didn’t give details of what specific tax
measures Obama is considering. The president has repeatedly
called for an extension of the 2 percent employee payroll tax
holiday that Congress passed last year and will expire in
His aides have said he is considering a reduction in the
employer portion of the payroll tax and proposals to reward
businesses for hiring unemployed workers.
‘Wait and See’
House Republicans haven’t embraced the idea of a payroll
tax holiday extension, with some lawmakers questioning its
impact on long-term economic growth. Brendan Buck, a spokesman
for Speaker John Boehner
, an Ohio Republican, said “we’ll wait
and see what the president is offering, but we hope it
represents a break from the costly, ineffective policies of the
last few years.”
House Budget Committee Chairman Paul Ryan
, a Wisconsin
Republican, and Ways and Means Committee Chairman Dave Camp
Michigan Republican, have called for lowering the top individual
income tax rate to 25 percent from 35 percent. Neither lawmaker
has specified how they would achieve such a reduction. A major
reworking of the tax code is unlikely before the end of the
Concern over the economy has increased as growth weakened
during the first half of the year to its slowest pace of the
recovery. U.S. stock futures
fell, indicating that the Standard
& Poor’s 500 Index may slide for a third day when trading
rose, pushing 10-year yields to a record low as
demand increased for the relative safety of government debt.
Benchmark 10-year rates
dropped eight basis points to 1.91
percent as of 9:17 a.m. in Tokyo, according to Bloomberg Bond
Trader prices. The 2.125 percent note maturing in August 2021
rose 22/32, or $6.88 per $1,000 face amount, to 101 30/32.
Labor groups, a key Democratic Party constituency, are
pressing Obama to seek major spending on infrastructure to
create jobs. Unions were disappointed in Obama’s agreement
Republicans last December that extended Bush-era tax cuts for
all Americans, including the wealthiest, and in the continuing
efforts to cut federal spending by $2.4 trillion.
The leaders of the AFL-CIO, Service Employees International
Union and the United Auto Workers had the president’s ear on the
flight aboard Air Force One to and from the Detroit rally.
AFL-CIO president Richard Trumka
said after returning to
Andrews Air Force Base that Obama declined to preview what he
would call for in his Sept. 8 speech.
Trumka said he expected to be pleased with the speech after
hearing the president’s remarks in Detroit, including his call
to create more jobs through federal spending on road and bridge
SEIU President Mary Kay Henry
said in addition to asking
Congress to pass legislation to encourage job creation, there
are steps the administration can take on its own. She said there
are unspent funds in individual agencies that could be used and
that people can be hired for work on disaster-stricken areas
using federal relief funds.
U.S. Chamber of Commerce President Tom Donohue
Obama to increase domestic energy production, boost trade with
countries including South Korea and step up the spending on
Donohue, in a letter yesterday to Obama that he previewed
last week, said the “most immediate priority” for the U.S. is
creating jobs for 25 million people who are “unemployed,
underemployed or have simply given up looking for work.”
Donohue also called for reductions in tax rates for
overseas earnings and on corporate capital gains.
Since World War II, no U.S. president has won re-election
with a jobless rate above 6 percent, with the exception of
, who faced 7.2 percent unemployment on Election
Day in 1984. The jobless rate under Reagan had come down more
than 3 percentage points during the prior two years.
For Related News and Information:
Top news stories: TOP
World stock indexes: WEI
Labor unions: UNIO
Election News: NI ELECT
Today’s top government stories: GTOP
--With assistance from Keith Naughton
, David Welch
Higgins in Southfield, Michigan, and Mike Dorning
and Angela Greiling Keane
in Washington. Editors:
, Don Frederick
To contact the reporters on this story:
in Washington at +1-202-624-1871 or
in Detroit at +1-202-624-1923 or
To contact the editor responsible for this story:
Mark Silva at +1-202-654-4315 or email@example.com.