Obama huddles with Democratic leaders over jobs

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Associated Press

Posted on October 8, 2009 at 8:06 AM

Updated Thursday, Oct 8 at 8:43 AM

WASHINGTON (AP) — Faced with a stinging rise in unemployment, President Barack Obama summoned Congress' top two Democrats Wednesday to the White House to discuss additional proposals to help the jobless and boost the economy.

Meeting in the Oval Office, the president, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid agreed to press for another extension of unemployment benefits for many people out of work more than nine months. They also weighed the prospects of extending tax credits for laid-off workers to purchase health insurance.

Administration officials and independent economists have been predicting that unemployment would hit or surpass 10 percent some time this year. The jobless rate for September reached 9.8 percent, the highest in 26 years, provoking anxiety in Congress and calls for new measures to stem the rise.

The attention to the economy came as Obama is engaged in a sensitive assessment of his policies in Afghanistan and as Congress moves forward on potentially historic health care legislation. Obama intended to keep a hand in the economy this week, turning his attention Friday to the financial sector with a White House event to push for a new Consumer Financial Protection Agency. The proposal has met resistance from the banking industry and from lawmakers.

Aides familiar with Wednesday's White House talks said the unemployment discussions also covered job creation opportunities in pending transportation and renewable energy legislation.

"The president, leader Reid, and I all agree that we must respond to the urgent need to promote the creation of good jobs, rebuild our work force, and restore stability to our neighborhoods," Pelosi, D-Calif., said in a statement after the meeting.

Reid, D-Nev., said money from the $787 billion economic stimulus package that Congress approved earlier this year must "get out the door as quickly and effectively as possible." He also said the administration and Congress should pursue new ideas to increase employment and help the still sputtering economy.

One idea getting renewed attention at the White House and in Congress would provide a tax credit to businesses that create new jobs. Obama's economic team proposed a similar incentive during negotiations over the economic stimulus but the idea was abandoned amid questions over its implementation.

"We're suggesting to people a business tax credit that is temporary for a few years that subsidizes businesses on the basis of their increases in payroll taxes," said Lawrence Mishel, president of the Economic Policy Institute. Mishel, who has advised Democrats on job creation, is scheduled to testify Thursday before a congressional subcommittee about his proposal.

Lawmakers also are considering extending tax credits now due to expire Dec. 1 for first-time homebuyers, though a White House aide said that issue did not come up in the Oval Office discussion. A bill to extend the tax credit to members of the military, foreign service or intelligence services who have served overseas this year is expected to pass on Thursday in the House.

The White House meeting came as House Republican leaders sent the White House a list of their own proposals, many of them tax cuts and business assistance measures that failed to win support during the earlier stimulus debate this year.

Republicans in their letter to Obama called for a small business tax exemption for 20 percent of their profits. They also want to let small businesses form pools to buy health insurance at lower group rates. And they proposed cutting the bottom two income tax rates for everyone — from 15 percent to 10 percent, and from 10 percent to 5 percent.

They again recommended expanded health savings accounts for small businesses, and letting more small businesses now losing money recoup taxes they paid on profits as long as five years ago.

"The engine of job creation in America is small business, not government," said the letter signed by 10 top House Republicans, including House Minority Leader John Boehner, R-Ohio.

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