Obama jobs bill set to be next Washington showdown

US President Barack Obama told lawmakers on Thursday to put partisan politics aside and quickly pass his American Jobs Act to spur job growth. Speaking to a joint session of Congress, the president unveiled the broad outlines of a $447 billion plan he said would encourage employers to hire new workers, create construction and education jobs, and protect the unemployed.

In his speech, Obama addressed the political impasse between his Democratic Party and Republicans that has characterised past months and which brought the country to the edge of default in August. "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," Obama said, in reference to the stiff Republican challenges his initiatives have often met.

That antagonism was again on display soon after the 45-minute speech, even if some Republican lawmakers said they were willing to find common ground with Obama. "Let's do the things we agree on, set aside the things we differ on and get to work, so we can have some results for people who are hurting so badly out there," said Eric Cantor, the Republican leader in the lower House of Representatives.

Cantor said he might support a Democratic initiative to extend a payroll tax cut that Congress passed last year. Obama’s new plan calls for $245 billion in tax cuts, including one measure to eliminate taxes for certain employers who hire new workers.

"These payroll tax reductions are the proposals that have the greatest chance of getting passed by Congress because it will be harder for Republicans to vote against proposed tax cuts," Paul Ashworth, chief US economist for international research consultancy Capital Economics, told Reuters. Obama’s proposal on cutting payroll taxes only prevents existing legislation from lapsing.

Republican House Speaker John Boehner, who has often been at odds with the president, said Obama’s ideas were worth considering. “We hope he gives serious consideration to our ideas as well," Boehner added after the address, likely setting the tone in Washington for the days ahead.

“What they dislike is that Obama presented an all-encompassing package with the words, ‘Pass this plan now’,” said FRANCE 24’s Washington correspondent, Stanislas de Saint Hippolyte. “This is the phrase that has angered some Republicans.”

Re-election battle

Some Republicans did not wait to announce their opposition. Congresswoman Michelle Bachmann, a conservative Republican presidential hopeful, told reporters that lawmakers should not pass the plan. “I say, Mr. President, stop," she said. "Your last plan hasn’t worked and it’s hurting the American economy.”

Senator Jeff Sessions, a Republican from Alabama, blasted Obama for mocking the recent debt limit deal that allowed the government to raise its borrowing limit by promising huge cuts in spending. “That agreement cut $7 billion in appropriations next year, but the president now wants to borrow hundreds of billions more to finance a second stimulus package,” the senator said.

Bachmann and Sessions were alluding to the $830 billion stimulus package championed by Obama back in February 2009, which critics say has added to the US deficit while being largely ineffective in bringing back economic growth. Some analysts predict that Republicans will continue to cite the much larger 2009 stimulus plan when they attack the new job creation plan.

Christine Rifflart, a specialist in the US economy at the French Economic Observatory, said it was untrue that the 2009 package had failed. Citing US Congressional Budget Office figures, Rifflart said the impact on the economy had been substantial, especially in 2009. “If there had been no stimulus package the recession would have been two times worse,” she said.

Obama, who is facing a staggering 9 percent unemployment rate ahead of his 2012 re-election bid, says his plan is right for the moment. “I intend to take that message to every corner of this country,” he told Congress on Thursday, almost as a warning to the programme’s opponents.

Obama’s supporters reacted favourably to the speech. Richard Trumka, president of the AFL-CIO labor federation, said Obama had started a serious nationwide debate on the job crisis. “He showed working people that he is willing to go to the mat to create new jobs,” declared Trumka, who had previously warned that unions would pay close attention to the plan in view of the 2012 election.

A particular crisis

While underscoring the economic hardships Americans are facing, Obama pushed for $49 billion to extend unemployment insurance for one year – benefits that would otherwise expire in January.

“The next election is fourteen months away," the president said. "And the people who sent us here – the people who hired us to work for them – they don't have the luxury of waiting fourteen months. Some of them are living week to week, paycheck to paycheck, even day to day."

Extending unemployment insurance, the effects of which would be felt immediately, is a key part of the Obama plan, Rifflart said. The US economy is largely unaccustomed and ill prepared to deal with long-term unemployment – people who have been out of work for six months or longer. “It’s one of the characteristics of the current crisis," Rifflart said. "Long-term unemployment now represents 45 percent of all unemployment. Even during the 1991 recession it only reached 25 percent."

Market analysts in the United States and abroad remain concerned that the new plan would, once again, be held up by wrangling when it reaches Congress. “Obama's plan was in line with expectations, and US stocks are unlikely to rally on it," Takashi Ushio, head of investment strategy at Marusan Securities in Tokyo, told Reuters. "Uncertainty about the direction of the US economy remains.”

In a sign that the upcoming battle over job creation will be tracked also outside the United States, the new head of the International Monetary Fund, Christine Lagarde, weighed in on the matter on Friday. “We welcome the proposals announced by President Obama last night, which focus on supporting growth and job creation in the short term," Lagarde said from London.