November 15, 2024

Obama to Press Committee on Jobs

Much more than he has in past months, Mr. Obama has spent this week combining his pitch for deficit reduction with a renewed emphasis on the need for further temporary spending and tax cuts to encourage businesses to hire and consumers to spend, going beyond proposals like continued payroll-tax relief.

Until the economy showed fresh signs of weakening lately, Mr. Obama had all but shelved additional stimulus proposals, given Republicans’ opposition. But even before he has disclosed details of his proposals — including new tax incentives for hiring, public works measures and state aid for teachers — Mr. Obama has essentially dared Republicans to try to block them, suggesting the onus is on Republicans to prevent a recovery-threatening impasse.

“My basic argument to them is this: We should not have to choose between getting our fiscal house in order, and jobs and growth,” Mr. Obama told an audience Wednesday in Atkinson, Ill., on the final day of his three-day bus tour through Minnesota, Iowa and Illinois.

As for deficit reduction, Mr. Obama suggested that he would call in his speech for the bipartisan 12-member Congressional committee that was created by his debt-reduction deal with Republicans this month to be more ambitious about deficit-reduction than its formal charge requires — including tax increases on the wealthy, which Republicans oppose.

“I’m going to make a presentation that has more deficit reduction than the $1.5 trillion that they’ve been assigned,” he said.

He said the ultimate goal should be $4 trillion in savings over 10 years. Counting the $1 trillion in cuts already agreed to in the debt-limit deal, that would suggest that the committee — and Mr. Obama — would have find $3 trillion more. But he will not seek that much.

“We’ll have more spending cuts than we have revenue,” he said, after expressing concern that Speaker John A. Boehner of Ohio had named Republicans to the panel who oppose any tax increases. “But we’re going to have to take a balanced approach,” Mr. Obama said, without “drastic cuts” in Medicare and Medicaid — though he made clear that changes to those fast-growing programs must be on the table.

The president’s plans for a speech with a broad economic agenda comes after months in which Republicans have ridiculed him as not having a detailed debt-reduction plan, and many supporters have urged him to show more leadership — and more fight — in the battle over the size and role of government.

Yet Republican leaders served notice that they would oppose stimulus measures now or higher tax revenues later. That signals another contentious budget battle this fall, after the summer-long chain of events that ended with the relatively modest deficit-reduction deal, which cleared the way for a needed increase in the nation’s debt limit but also provoked Standard Poor’s to downgrade the United States credit rating and contributed to days of market turbulence.

In a memorandum to House Republicans on Wednesday, Representative Eric Cantor of Virginia, the majority leader, said their agenda must include “stopping the discussions of new stimulus spending with money that we simply do not have.” He accused the president of waging “class warfare” — Republican code for Mr. Obama’s proposed tax increases on high incomes.

Senator Mitch McConnell of Kentucky, the Republican minority leader, criticized “job-killing tax increases” and said, “Continuing the spending spree on failed stimulus programs won’t shrink the deficit.”

Many economists argue that while temporary spending and tax cuts add to deficits initially, such measures can increase tax collections, reduce costs for safety-net programs and ultimately keep deficits smaller than otherwise by spurring business activity and lowering unemployment. How economists would judge Mr. Obama’s proposals will depend on their details; contrary to Republicans’ claims, economists generally judged his 2009-10 stimulus program to have helped, but to have been insufficient to overcome the deep downturn.

While the details, date and venue of Mr. Obama’s speech remain to be finalized, the president throughout his bus tour hinted at his approach for simultaneously stimulating the economy while reducing projected deficits through spending cuts and revenue increases to take effect once the economy recovers.

In Minnesota on Monday, Mr. Obama said he would propose “a very specific plan to boost the economy, to create jobs, and to control our deficit.

“And my attitude is, get it done,” he contined. “And if they don’t get it done, then we’ll be running against a Congress that’s not doing anything for the American people, and the choice will be very stark and will be very clear.”

To sustain the wobbly recovery, Mr. Obama has called for extending for another year a cut in employees’ payroll tax and unemployment compensation for those out of work longer than six months. He has also proposed an infrastructure bank to leverage public and private money for roads, bridges, schools and other public projects, renewed tax write-offs for businesses’ capital investments, an overhaul of patent law to spur innovation and approval of trade pacts to promote jobs in export industries.

This week, Mr. Obama suggested he also would ask Congress to provide aid to financially struggling states and cities to keep teachers on the job — a move many Democrats and local officials have been pleading for.

“I personally believe that one of the most effective ways that we could help the economy is making sure that we’re not seeing more teacher layoffs,” he said, to applause.

Aides say Mr. Obama is also considering expanding payroll-tax relief to employers and a tax credit for new hires. Since an infrastructure bank would take time to start up, he also will propose other ways to encourage construction more quickly, an aide said.

“When interest rates are low, contractors are begging for work, construction workers are lining up to find jobs, let’s rebuild America,” he said this week.

Mark Landler contributed reporting from Atkinson, Ill.

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Oil Executives, Defending Tax Breaks, Say They’d Cede Them if Everyone Did

At a three-hour Senate Finance Committee hearing that was largely political theater interrupted occasionally by a serious tax policy discussion, the oil industry executives said their current tax breaks were not subsidies but legitimate tax deductions, shared in some cases with other industries.

Rex W. Tillerson, chief executive of Exxon Mobil, said that the provisions, such as a tax deduction for certain types of manufacturing, were not “special incentives, preferences or subsidies for oil and gas, but rather standard deductions applied across all businesses in the United States.”

He said that eliminating the provision just for the oil industry would be “misinformed and discriminatory.”

Under questioning from Senator Max Baucus, Democrat of Montana, the panel’s chairman, Mr. Tillerson said that he would support repeal of the manufacturing tax credit and other tax incentives, as long as all businesses were treated the same.

“Repeal it for everybody, gone,” he said. “Everything for everybody everywhere ought to be on the table.”

At issue was a Democratic-sponsored bill to rescind roughly $2 billion of the $4 billion in tax incentives the oil industry now enjoys annually, with the money dedicated to deficit reduction. Mr. Tillerson shared the witness stand with top executives of the four other biggest multinational oil companies, John S. Watson of Chevron; Marvin E. Odum of the United States division of Shell; H. Lamar McKay of BP America; and James J. Mulva of ConocoPhillips.

Collectively, the five companies reported more than $35 billion in first-quarter profits, and are on a pace to set record profits for the year. Their profits, their tax treatment and gasoline that in many areas is over $4 a gallon have made them juicy targets for Democrats seeking political points and painless revenue.

The bill, which is expected to come to a vote on the Senate floor next week, is unlikely to command a filibuster-proof majority in the Senate. Even if it passes, it has little chance in the Republican-dominated House, which seems more inclined to provide the oil companies more access to public lands and waters than to clamp down on their tax incentives.

The House passed the third of three Republican pro-drilling bills on Thursday. The measure would force the Interior Department to open large tracts of the Atlantic, Pacific and Arctic coasts to oil exploration and to set annual production goals. The administration and most Democrats opposed it, saying that the Deepwater Horizon accident a year ago demonstrated the dangers of offshore operations.

The Senate tax bill’s chief sponsor, Senator Robert Menendez of New Jersey, demanded that Mr. Mulva apologize for a ConocoPhillips press release on Wednesday that called the tax proposal “un-American.”

“I think that’s beyond the pale,” Mr. Menendez said. “I was hoping you would come here and apologize for that.”

“Nothing was intended personally,” Mr. Mulva said.

“So the bottom line is you’re unwilling to apologize,” Mr. Menendez said. “So I’ll continue to take offense.”

Most Republicans, along with Democratic senators from energy-producing states, appear sure to oppose the plan. One oil-state Democrat, Mary L. Landrieu of Louisiana, said this week that oil and gas subsidies accounted for less than 13 percent of all United States energy subsidies.

The ranking Republican on the finance committee, Senator Orrin Hatch of Utah, suggested that Democrats were playing a cynical game, seeking to blame oil companies while, he asserted, intending to raise gasoline prices to force reduced consumption.

“So while the American people ask Congress to do something about high gas prices,” he said, “the response of Democrats is to rail against oil executives, to mask the fact that their policy is actually to make the price at the pump more painful.”

He called the hearing a “dog and pony show” and displayed a blown-up picture of a dog riding a pony, to underscore his argument that the hearing was just a chance for Democrats to score political points, without doing anything about high gas prices or a sensible energy policy.

Mr. Odum of Shell said in an interview after the hearing that he was disappointed that the discussion focused on the relatively small value of the oil industry’s tax breaks and not on the broader question of how to address the deficit and expand domestic production of oil and gas.

“The piece I take the most exception to, once you get past some of the theater aspects of the setting, is that it’s such a narrow view,” he said. “If the purpose is to address the deficit and the long-term health of the economy, the bigger picture is more important. And that is to produce more oil and gas and get the revenue streams and jobs from that.”

Brian Knowlton contributed reporting.

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