Obama: Jobs plan can protect U.S. economy

President Barack Obama said Congress needs to pass his $447 billion jobs bill quickly to “guard against another downturn” in the U.S. economy if the European debt crisis worsens.

“Our economy really needs a jolt right now,” Obama said in remarks at a White House news conference. He endorsed a proposal by Senate Democrats to impose a surtax of 5.6 percent on people earning at least $1 million to generate about $450 billion to pay for his plan.

“I’m fine with the approach that they’re taking,” the president said. “We’ve always said that we would be open to a variety of ways to pay for it.”

Obama is scheduled to meet with Senate Majority Leader Harry Reid and other Democratic senators at the White House at 5:30 p.m. today to discuss strategy for bringing the jobs plan up for a vote next week.

“There’s is no doubt the economy is weaker now than it was at the beginning of the year,” Obama said. He cited economists who argue a jobs bill is like an “insurance policy against a double-dip recession” that could boost consumer confidence, cut taxes, put money into consumer pockets and people back to work.

He cited Japan’s tsunami, higher oil prices during the Arab Spring uprisings, the European debt crisis and a “completely unnecessary” fight in Congress over the U.S. debt limit as contributing to slower economic growth and declining consumer confidence.

“The problems Europe is having today could have a very real effect on our economy at a time it’s already fragile,” Obama said. “This jobs bill can help guard against another downturn if the situation in Europe gets any worse.”

Obama has been campaigning to promote the package of tax cuts and spending programs in key electoral swing states, including the home districts of Republican critics, suggesting failure to act translates into a “do-nothing Congress.”

“If Congress does nothing, then it’s not a matter of me running against them. I think the American people will run them out of town,” he said. “I would love nothing more than to see Congress act so aggressively that I can’t campaign against them as a do-nothing Congress.”

Still, Democrats control the Senate with 53 of 100 votes and they’ll need at least seven Republicans to reach the threshold needed to begin debate. Some Democrats, such as Ben Nelson of Nebraska, oppose bringing the measure to the Senate floor as well.

“I think we need to cut spending in this town, and not raise taxes,” Nelson said.

Sluggish U.S. economic growth and an unemployment rate that has been stuck at about 9 percent will be top issues next year as Obama faces re-election. The European debt crisis, political haggling in the U.S. and a plunge in stock prices have led to a drop in consumer and business confidence that may keep hurting spending and hiring.

Federal Reserve Chairman Ben S. Bernanke said Oct. 4 that the recovery is “close to faltering” and that the central bank can take further steps to sustain it.

Republicans say some of Obama’s measures, such as payroll tax cuts, are worth considering, though they object to spending proposals and oppose raising taxes to pay for them.

House Speaker John Boehner, an Ohio Republican, said Oct. 4 “there’s an honest effort under way to try to find common ground” but that “nobody gets everything they want.”

While Obama called for Congress to vote on his entire proposal, White House press secretary Jay Carney said the president would sign legislation that included only portions of his plan.

Under the bill, Obama proposes to reduce payroll taxes for workers and employers, extend jobless benefits, provide aid to states for schools and emergency workers and boost spending on public works projects such as roads and bridges. It also would provide tax breaks for employers to hire the unemployed.

Economists surveyed by Bloomberg News said the legislation would increase gross domestic product by 0.6 percent next year and add or keep 275,000 workers on payrolls. The median estimates in the survey of 34 economists also showed the bill would lower the jobless rate by 0.2 percentage point in 2012.

Obama would pay for it by capping itemized deductions for individuals earning more than $200,000 a year and couples earning more than $250,000. The plan would treat carried interest as ordinary income to raise $18 billion, end oil and gas subsidies for a savings of $40 billion and repeal accelerated depreciation on corporate jets to save $3 billion.

The president also said the European debt crisis is putting a “severe strain” on the global economy, and that he wants to see a “concrete” plan for dealing with it when leaders of the Group of 20 nations meet Nov. 3-4 in Cannes, France.

Obama said China “has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries,” including the U.S. Still, passing a Senate bill to punish China for an undervalued currency may be “symbolic, knowing that they’re probably not going to be upheld by the World Trade Organization,” he said.

U.S. banks are using regulations imposed after the financial crisis as an “excuse” to impose new fees on consumers, Obama said, while saying he wouldn’t use government regulators to dictate banking profits.

“Banks and any business in America can price their products any way they want — that’s how the free market works — as long as there is transparency and accountability,” he said.

Wall Street protesters are “giving voice to a more broad- based frustration about how our financial system works,” Obama said. “You’re still seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on abusive practices that got us into this problem in the first place.”

--Editors: Joe Sobczyk, Bob Drummond

To contact the reporters on this story: Roger Runningen in Washington at rrunningenbloomberg.net; Hans Nichols in Washington at hnichols2bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34bloomberg.net