Reporting from Washington — Pressure on President Obama to do something about the weakening economy intensified Friday with new government data showing that hiring remains lackluster, nudging the nation's unemployment rate up to 9.6%.
With congressional elections less than eight weeks away, Obama appeared in the Rose Garden to say that he would soon propose a new package of tax cuts and other incentives to spur employment.
"We are confident that we are moving in the right direction, but we want to keep this recovery moving stronger and accelerate the job growth that's needed so desperately," the president said.
Obama spoke after the Labor Department reported that the nation lost 54,000 net jobs in August, fewer than economists had expected but still dismal. The private sector's weak gain of 67,000 jobs was wiped out largely by the number of federal census jobs that ended.
The unemployment rate edged up to 9.6% from 9.5% in July, the first increase in that figure since April.
The president is expected to use a speech in Cleveland on Wednesday to outline a series of measures to kick-start the economy, which could include extending research and development tax credits for business, increasing spending on highways and other public works projects, and retaining the middle-class portion of the Bush administration tax cuts that are set to expire at the end of the year.
Many analysts believe that those measures will have only a modest effect, especially in the short time remaining before the midterm elections. But with Republicans lined up solidly against the Democratic administration on economic policy, more far-reaching proposals are considered out of the question.
"The key will be whether it's smart — getting bang for the buck — and if it's big enough," said Heidi Shierholz, an economist at the nonprofit Economic Policy Institute, a liberal-leaning research group in Washington. "And I'm concerned on both of those fronts."
One idea that has received some support from Republicans is a three-month payroll tax holiday for all workers and businesses.
That would amount to a 6.2% tax cut for each, freeing up money that employers could use for new hiring and workers could use to boost consumer spending.
But White House aides indicated that Obama will not embrace the idea. It would cost the government about $120 billion in revenue if adopted for two months — and a staggering $700 billion if continued for a full year.
Also, an unrestricted tax holiday would not be narrowly focused on Obama's goal of adding jobs.
"I think the notion of giving payroll tax holidays is not very well targeted," said Gary Burtless, an economist at the Brookings Institution think tank in Washington. "That's going to go to all kinds of firms, even those that are reducing their employees."
Instead, Alan Krueger, the Treasury Department's chief economist, said Obama asked his economic team to "review options that are targeted and responsible" — that is, more narrowly focused and less likely to aggravate the government's budget and deficit problems.
Recognizing that many Americans have an unfavorable view of last year's massive stimulus program, White House Press Secretary Robert Gibbs has been taking pains to caution that "some big new stimulus plan is not in the offing.''
Among the narrower options under consideration is extending a tax break signed into law in March that exempts employers from their share of payroll taxes for the remainder of 2010 and provides other incentives if the employer hires someone who has been unemployed for at least 60 days.
The law, known as the Hiring Incentives to Restore Employment Act, or HIRE, passed with bipartisan support, and one of its main backers, Sen. Charles E. Schumer (D-N.Y.), recently urged a six-month extension.
A White House aide, Jen Psaki, would not lay out specifics, but said that "the options under consideration build on measures the president has previously proposed."
The moves being discussed are unlikely to change the jobs picture any time soon, Burtless said. He noted that the R&D tax credit, which expired Dec. 31, has repeatedly been renewed and is expected to be extended again this year.
The House already has approved a one-year extension, and Obama proposed a permanent extension in his 2011 budget.
"It's going to go through regardless of whether we call it a stimulus," Burtless said.
A permanent extension would cost about $83 billion over 10 years, but only about $5.4 billion would be spent in 2011, according to the Office of Management and Budget.
Obama's economic policies, which have come under repeated fire from Republican leaders, faced renewed pressure after the Labor Department's release Friday of the August employment figures.
Although the economy technically has been recovering since last summer, hiring has been so sluggish that 15 million American workers remain jobless this Labor Day weekend.
