WASHINGTON – President Barack Obama will speak Tuesday on his plans to put Americans back to work amid a double-digit jobless rate, a political poison pill that threatens to diminish or even reverse Democratic congressional majorities in elections next year.
Heading into the speech, with unemployment figures slightly improved in October but still standing at 10 percent, Obama suggested he might turn to unspent money in the massive federal bailout program to fund job growth. The bailout was put in place in the final weeks of George W. Bush’s administration and is credited with preventing a feared meltdown of the American financial system.
The war in Afghanistan and health care reform, meanwhile, have taken the spotlight for much of Obama’s first year in office. However, American voters often vote on pocketbook issues over all others, and the effort to heal the ailing U.S. economy could prove to be the most crucial to his Democratic Party’s fortunes at next year’s congressional elections.
Obama will be looking for something that can dramatically reverse the fortunes of millions of U.S. families that have lost not only jobs, but huge portions of retirement savings and, in many cases, seen their homes taken over in mortgage foreclosures.
He also may be seeking to show his commitment to the problems of everyday Americans before he flies off to Oslo to receive the Nobel peace prize Thursday.
The U.S. economy looks to be on the mend after the deepest downturn since at least World War II, but unemployment and scarce credit for small businesses have left the electorate in a sour mood. That could magnify the historic tendency of U.S. voters to vote against members of Congress of the president’s party in the first national balloting after a change in the White House.
The Democrats currently hold a majority in both chambers of Congress. Obama succeeded Bush on Jan. 20 and will be midway through his term at the time of the November 2010 congressional elections.
There has been particular focus in Congress on ways to use leftover funds in the $700 billion Troubled Asset Relief Program (TARP) to pay for new spending on roads and bridges and to save the jobs of firefighters, teachers and other public employees. Republican leaders are voicing strong opposition to that idea, saying all the money should go toward reducing the federal deficit.
The Obama administration will lose $200 billion less than expected from the federal bailout program, according to a Treasury official who spoke on condition of anonymity because that new projection had not been released. That’s down from the a $341 billion estimate of August. The lower estimate reflected faster repayments by big banks and less spending on some of the rescue programs as the financial sector recovered from its free fall more quickly than anticipated.
“TARP has turned out to be much cheaper than we had expected,” Obama told reporters Monday in a brief question-and-answer period.
Turning a highly unpopular financial rescue programlike TARP into a potentially popular one that creates new jobs has strong political appeal for Obama and Democrats in Congress. Republican critics have depicted such an approach as a backdoor way of enacting a second economic stimulus package
The president’s spokesman, Robert Gibbs, later said his boss was “looking at whether or not using that for legislation (TARP) to create an environment for increased hiring for jobs, whether that would be available.” The funds were initially appropriated in October 2008 when the U.S. financial system appeared on the verge of collapse. It apparently was not clear how much or even whether the leftover money could be diverted to other uses.
“The question is are there selective approaches that are consistent with the original goals of TARP – for example, making sure that small businesses are still getting lending – that would be appropriate in accelerating job growth,” Obama said.
Regardless of whether that money can be applied to invigorating small businesses and boosting employment in both the private sector and among state and local governments, Gibbs was downplaying quick fixes.
“The president is not going to unveil the silver bullet idea which adds all the jobs that are – all the jobs that will be made up by the loss and the economic downturn and then some,” the spokesman said.