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Obama turns to small-scale solutions to a weak economy

The White House, threatened by the high unemployment rate, proposes free-trade agreements and more spending on high-speed rail in the absence of more ambitious tools, such as stimulus spending.

July 09, 2011|By Peter Nicholas, Washington Bureau
  • President Obama delivers a statement on the monthly jobs report in the Rose Garden at the White House. The unemployment rate is at 9.2%.
President Obama delivers a statement on the monthly jobs report in the Rose… (Pablo Martinez Monsivais…)

Reporting from Washington — As White House aides search for ways to show progress on the economy, they are banking that a set of small-scale proposals may be able to win congressional approval and dent a chronically high unemployment rate considered the main threat to President Obama's reelection chances.

Obama has turned to the modest measures in the absence of more ambitious tools, such as stimulus spending, which are not an option for the White House in the climate of austerity and fiscal discipline dominating Washington.

Examples include more spending on high-speed rail, roads and bridges; improvements to the patent system; free-trade agreements; and extending a one-year payroll tax cut that is expected to provide an average benefit of $695 per worker.

Privately, White House advisors worry that there is no elixir for jolting the economy in ways that could alter the dynamics of the election campaign. But they hope at least to show strides in reducing the unemployment rate. That task got tougher Friday after a bleak jobs report showed the unemployment rate rose to 9.2%.

"We have proposed a lot of things in our budget that Congress has not acted on," said a White House official, who spoke on the condition of anonymity because he was not authorized to speak publicly on the matter. "So, patent reform: Is that the single best way to start creating jobs tomorrow? Of course not. No one is arguing that. But by reducing lawsuits, does it increase the desirability of making investments today? Yes, it does."

Even the scaled-back measures face serious obstacles. Free-trade agreements with South Korea, Panama and Colombia already have encountered GOP resistance over Obama's insistence on federal aid to U.S. workers displaced by the pacts.

Similarly, Obama has proposed $53 billion for high-speed rail over six years, but money for this year was eliminated in the spring budget deal.

Obama's mix of proposals is far removed from the stimulus package he put forward after taking office, a reflection of Congress' focus on deficit reduction. The patent bill pending in Congress is aimed at reducing the three-year delay in processing patent applications, which would allow businesses to develop products more quickly.

Obama also wants to develop an "infrastructure bank" that would rely on public and private money to pay for public works projects, a proposal he first rolled out during his presidential campaign.

"It's a smarter way to finance infrastructure investment in a world of more-limited resources," the White House official said. But the proposal has faced at best a mixed reaction among lawmakers.

A steady stream of polls has shown that voters are unhappy with Obama's handling of the economy. Even members of the president's party fear that the economy could ultimately be Obama's political undoing.

Henry Cisneros, a housing secretary under former President Clinton, said: "You can't win this if the economic foundation is truly shaky. He really does have to turn this around, in my judgment."

That leaves Obama in a politically difficult spot. In the absence of healthy job growth, White House aides want to show that the president is hard at work on a solution.

That has been a preoccupation from Day One. When Obama took office, former Press Secretary Robert Gibbs and others wanted to create a kind of economic "situation room" modeled after the one used for national security. It was to be outfitted with an electronic ticker tape showing the latest economic data.

That idea never gained traction, but Obama has been speaking about the economy at every turn. He typically ventures to key states once a week. On June 28, he appeared at an advanced manufacturing plant in Iowa, a swing state up for grabs in 2012. On Wednesday, he employed new media tools to reach a wider audience, fielding questions via Twitter.

Talking about a fragile economy is politically treacherous. The instinct is to tout one's accomplishments, and parts of Obama's speeches are devoted to steady gains in private-sector job growth. He used the same approach in a Rose Garden address after Friday's jobs report.

But any hint of a triumphal tone would risk making him appear out of touch. Since Obama took office, unemployment has risen from 7.8% to 9.2%. In the meantime, major household expenses have risen sharply. A gallon of unleaded gas now averages $3.59, up from $2.72 a year ago.

A major theme of Obama's argument is that the middle class was faltering under his predecessor. Obama is asking voters to give him more time to dig out of a mess that took hold long before he got to the White House.

Speaking at a fundraising dinner in Philadelphia last week, he said that the nation's challenges "weren't a year in the making or two years in the making, but are actually 10 years in the making."

But Obama's nuanced message isn't breaking through. A Gallup Poll last month showed that Americans' economic confidence was near its low for the year.

For the White House, it's tough to get the public to pay attention to anything else.

A Democratic senator spoke by phone recently with White House Chief of Staff William M. Daley. "He said, 'Honest to goodness, if we're not talking about jobs and the economy, nobody is listening,' " recalled the senator.

peter.nicholas@latimes.com

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