Obama gave a shot of momentum to congressional efforts to move a package quickly, though it remains unclear when a Senate bogged down with the healthcare debate will take action.
Senate Democrats praised the president’s plan as similar to their own, but were tight-lipped on how expensive they think a new jobs bill should be.
“We’re working on the aggregate numbers at this point,” said Sen. Byron Dorgan (D-N.D.), who is working on the bill with Majority Whip Dick DurbinDick DurbinManchin urging colleagues to block funding bill as shutdown looms The Hill's 12:30 Report Democrats tamp down talk of shutdown MORE (D-Ill.).
The president has invited a bipartisan group of lawmakers to the White House on Wednesday to discuss the legislation.
Obama pressed Congress to approve a series of small-business tax cuts, additional infrastructure spending and tax incentives for consumers who weatherize their homes.
He said the $700 billion bailout program would be unwound to pay for the proposals, which he cast as fiscally conscious.
“Given the challenge of accelerating the pace of hiring in the private sector, these targeted initiatives are right and they are needed,” he said in a speech at the left-leaning Brookings Institution.
“But with a fiscal crisis to match our economic crisis, we also must be prudent about how we fund it. So to help support these efforts, we’re going to wind down the Troubled Asset Relief Program, or TARP — the fund created to stabilize the financial system so banks would lend again.”
Administration officials on Monday said the TARP was expected to cost at least $200 billion less than anticipated over the summer. Banks have rushed to pay back the government, with Bank of America last week saying it intended to pay back $45 billion. That has put pressure on Citibank to pay back the $45 billion it owes the government, something it says it likewise intends to do.
“This gives us a chance to pay down the deficit faster than we thought possible and to shift funds that would have gone to help the banks on Wall Street to help create jobs on Main Street,” Obama said of the returned TARP funds.
The new estimates suggest the final cost of TARP could be $141 billion, with a sizable chunk of the losses coming from the government’s use of the funds to bail out General Motors and Chrysler. The Detroit News reported Tuesday evening that the administration on Wednesday will report it expects to lose $30 billion of its $82 billion investment in the auto industry.
The estimates would leave hundreds of billions for deficit reduction or new spending, and Washington has been consumed in recent days with that debate.
Republicans oppose using TARP funds to pay for a new jobs bill, and argue money from this year’s $787 billion stimulus should be used instead. They say all leftover or returned TARP money should go instead to reducing the $12 trillion federal debt.
House Minority Leader John BoehnerJohn BoehnerThe Hill's 12:30 Report Boehner compares Trump to Teddy Roosevelt Boehner: 'Thank God' I wasn't in the middle of election MORE (R-Ohio) on Tuesday called the idea of using TARP funds paid back to the government for new programs “repulsive.”
“I don’t think any member of Congress, nor any taxpayer at the time, thought that the TARP would morph into a political slush fund,” said Sen. John ThuneJohn ThuneOvernight Tech: Last-ditch effort to get Dem FCC commish confirmed | Facebook's Sandberg on fake news | Microsoft completes LinkedIn deal FCC chairman willing to resign to get colleague confirmed Overnight Tech: AT&T, Time Warner CEOs defend merger before Congress | More tech execs join Trump team | Republican details path to undoing net neutrality MORE (R-S.D.).
Using TARP funds for most of the proposals in Obama’s jobs package would require legislation, something Obama said he would work with Congress to accomplish. The TARP statute put limits on what the administration could do with TARP funds and specifically says funds repaid by banks should be returned to the Treasury.
Obama and White House officials acknowledged there are legal limits on how they spend TARP money, but they said they can use leftover funds to help small businesses secure credit to create jobs.
While Obama’s plan includes some specific proposals, he left many of the details to Congress.
Obama specifically called for a one-year elimination of the capital gains tax on small businesses and for an extension of tax write-offs that would allow small businesses to hire more workers.
A White House fact sheet said the president was calling for extending two provisions in the $787 billion stimulus approved earlier this year that allow small businesses to expense equipment and to accelerate the rate at which they may deduct capital expenditures.
Obama also said it would be worth creating a tax incentive for small businesses to hire workers, but did not offer specifics.
On infrastructure spending, Obama is proposing additional investments in highways, transit, rail, aviation and water. But the White House did not provide additional specifics, such as its preference for the amount of infrastructure spending.
Obama sharply criticized the GOP, saying it had decided to hand the financial crisis over to others after presiding over the decisionmaking that led to the problems. He also described as a “false choice” the decision between paying down the deficit and investing in job creation because of the benefits to government revenue from creating new jobs.
The president decried the TARP program, calling it a “flawed” proposal that his administration was able to improve upon. The program has grown more unpopular as Wall Street firms have announced record bonuses while unemployment jumped above 10 percent.
Yet Obama also praised the TARP as indisputably staving off a worse financial crisis.
“There has rarely been a less loved or more necessary emergency program than TARP, which as galling as the assistance to banks may have been, indisputably helped prevent a collapse of the entire financial system,” Obama said.