Obama weighs steps to spur jobs, wary on deficit

By Alister Bull and Andy Sullivan, Reuters
Fri Nov 6, 5:09 PM EST
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U.S. President Barack Obama speaks about the economy in the Rose Garden of t...

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WASHINGTON — U.S. President Barack Obama on Friday listed a range of fresh options being considered by the White House to spur growth after "sobering" news that unemployment spiked to a 26 1/2-year peak last month.

Obama, who earlier signed a bill to extend jobless benefits and a homebuyer tax credit, said his team was studying new spending on roads and bridges, business tax cuts, refitting buildings to make them more energy efficient, easing the flow of credit to small businesses and boosting U.S. exports.

"Although it will take time and it will take patience, I am confident that our economy will recover, I'm confident that we're moving in the right direction," he said in a statement delivered in the White House Rose Garden.

A senior White House official said Obama's team was looking to move forward in exploring several fresh job creation options in the coming weeks, rather than months, but was not able to offer any further specifics at this stage.

House of Representatives Speaker Nancy Pelosi said Congress "must do more" to create jobs but she, and other Democrats, shied away from outlining specific stimulus spending that could open them to charges of further ballooning the budget deficit.

Obama faces pressure to deliver a second fiscal stimulus, on top of a $787 billion emergency bill he signed in February, after U.S. unemployment jumped to 10.2 percent last month.

But the White House said the first priority was to get the cash from that initial emergency bill spent.

"Our focus obviously continues to be on ensuring that that money gets out as quickly as it is prescribed," White House spokesman Robert Gibbs told a daily briefing.

Although U.S. growth resumed in the third quarter, ending the worst economic downturn in 70 years, Gibbs said the level of unemployment was likely to get "a little worse" before it starts to improve.

Americans remain troubled by the economic outlook and this anxiety was partly to blame for the defeat of two Democratic politicians in gubernatorial elections on Tuesday on whose behalf Obama had campaigned.

Although some economists think Obama should spend more money to boost growth, others worry it could do more harm than good by increasing the size of the government debt at a time when the country is already facing record budget deficits.

Obama, aware that such concerns can roil financial markets and drive up long-term U.S. borrowing costs, went out of his way to point out that the bill to extend jobless benefits and a homebuyer tax credit would be deficit-neutral.

"The bill I signed will not add to our deficit. It is fully paid for and so it is fiscally responsible," he said.

The House Democrat whose committee oversees federal spending said a short-term boost in spending would actually help reduce deficits over the long-term because there would be fewer unemployed people needing federal benefits.

Once back to work, they would generate government revenues through tax payments.

"We need to give the economy a bigger kick," House Appropriations Committee Chairman David Obey said in a statement.

"The bottom line is that additional action is required to help families and small businesses who are struggling," he added. "An effective short-term boost would mean a stronger economy, less unemployment and ultimately lower deficits."

(Additional reporting by Matt Spetalnick; editing by Todd Eastham and Paul Simao)

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