Obama calls for jobs measures despite budget deficit worries

President Barack Obama backed a push for job creation measures despite long-term concerns about the deficit at a White House jobs summit Thursday.

One day ahead of an unemployment report expected to show the jobless rate still in double digits, Obama called on business executives, labor leaders and economic experts who attended the summit to deliver a message to politicians skeptical of more spending. The president argued that the immediate concern for lawmakers should be over unemployment, not curtailing spending and other measures that were aimed at rebuilding the economy.

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"If we can't grow our economy, then it is going to be that much harder for us to reduce the deficit," the president said. "The single most important thing we could do right now for deficit reduction is to spark strong economic growth, which means that people who've got jobs are paying taxes and businesses that are making profits have taxes -- are paying taxes."

Democrats in Congress and the White House are crafting job creation legislation to help lower the jobless rate, which hit 10.2 percent in October. Republicans have criticized Obama and the Democrats' approach to jumpstarting the economy, noting that the unemployment rate has only risen from less than 8 percent since the $787 billion stimulus was passed by Democrats in February. The deficit, meanwhile, hit a record $1.4 trillion in 2009 and is expected to be as large in 2010.


As Obama stressed the need for action on unemployment, House Democrats signaled Thursday that their entire 2010 legislative agenda will hinge on creating jobs and cutting the deficit.

House Majority Leader Steny Hoyer (D-Md.) told reporters that those issues are the most important to political independents, whose votes will be crucial in next year's mid-term elections.

“If jobs don't get into positive numbers, I think the people are going to continue to be concerned,” he said. “And when they're concerned they look for somebody new, whether you're a Republican or a Democrat.” 

Hoyer has called for passage of a jobs bill before the holiday recess. Senate Democrats have said that they will take up job creation legislation after their work on healthcare reform.

Obama is expected to press for more action on the employment front when he visits Allentown, Pa., for a jobs event Friday and gives a speech on the economy at the Brookings Institution on Tuesday.

The Labor Department's unemployment report for November, to be released Friday morning, is expected to show the jobless rate unchanged or slightly higher, according to the White House and independent projections.

Economists expect the jobless rate to remain above 10 percent into the middle of next year. The White House's own economic team expects the rate to average more than 9 percent in 2010 and more than 8 percent in 2011.

A Democracy Corps poll last month found that voters believed Republicans would do a better job on the economy than Democrats. Republicans held a 45 percent to 42 percent advantage over Democrats, who were more trusted than the GOP on the economy in previous polls.

The White House billed Thursday's "Forum on Jobs & Economic Growth" as a chance for the president to solicit ideas to include in the coming jobs bill. Obama voiced support for a number of ideas, including increased credit for small businesses and fiscal aid for state and local governments. He acknowledged that the measures would cost public dollars, but said they're "actually good investments to make right now."

"The last thing we would want to do in the midst of what is a weak recovery is us to essentially take more money out of the system either by raising taxes or by drastically slashing spending," he said. "And frankly, because state and local governments generally don't have the capacity to engage in deficit spending, some of that obligation falls on the federal government."

But Obama also addressed deficit concerns. Fiscal conservatives have warned that the White House's proposed budget, which projects the $12 trillion debt to grow by $9 trillion over the next decade, will lead to a crowding out of private investments and fewer jobs.

Obama said that businesses and markets need to sense that the administration has medium- and long-term plans to reduce the deficit.

"So we've got about as difficult a economic play as is possible, which is to press the accelerator in terms of job growth, but then know when to apply the brakes in the out years and do that credibly," he said. "And you know, we are trying to strike that balance, but we're going to need help from all of you who oftentimes are more credible than politicians in delivering that message."

House Republicans at their own jobs summit in the Capitol on Thursday called for lower taxes and criticized Democrats for adding to economic uncertainty hamstringing companies.

“When you look at all these policies that are being proposed at the tax rates that are so uncertain, it’s no surprise to us that employers continue to do nothing,” House Minority Leader John Boehner (R-Ohio) said.

Douglas Holtz-Eakin, a former Congressional Budget Director and aide to Sen. John McCain's (R-Ariz.) 2008 presidential campaign, slammed Democrats for failing to produce a plan to reduce red ink.

“They are engaged in a trajectory of what looks like a third-world debt crisis," Holtz-Eakin said. "We know how that ends – it ends with currency problems, higher inflation, higher interest rates that’s damaging for the economy."

Jared Allen and Molly K. Hooper contributed to this story