By Brai Odion-Esene
WASHINGTON (MNI) – President Barack Obama Thursday night is
expected to unveil a jobs package aimed at giving the biggest boost to a
flagging economy in the shortest time possible, but a lack of faith in
Congress’ ability to act — and act quickly — means it is the Federal
Reserve that first bears the burden of sparking the stalled recovery and
encouraging greater job creation.
Given the current adversarial state of U.S. politics, there is a
growing expectation that a reluctant Fed will once again alone step in
quickly with monetary stimulus measures even though some of the Fed’s
policymakers now insist further aid should now be left to lawmakers on
Capitol Hill.
Federal Reserve Chairman Ben Bernanke is scheduled to address the
Economic Club of Minnesota before Obama speaks, on Thursday afternoon,
so his speech has the potential to upstage anything Obama might say
later that night.
The truth of the matter is while the White House — through Press
Secretary Jay Carney — insists Obama’s proposals “will be judged by
independent, outside economic analysts to positively affect job growth
and economic growth,” that still does not guarantee a warm reception and
rapid response to the president’s call to action by Congress.
Preempting any Republican opposition, Carney noted to reporters
that the proposals are the measures “that will have historically had
bipartisan support, can be acted on very quickly by Congress, and can
have a very quick and positive impact on the economy and on employment.”
“The plan that the president puts forward, the proposals will be
aimed at the most impact that can be achieved in the earliest possible
time in terms of effect on the economy, effect on jobs,” he said.
But recent evidence suggest that every issue, regardless of
importance, that goes before Congress these days seems to languish while
partisan battles wage on. But the Fed is capable of unilateral action in
the face of dire economic news, such as the last Federal Open Market
Committee meeting when Fed officials pledged to keep interest rates
exceptionally low until at least mid-2013.
Since then a dismal jobs report, and August’s stock market
volatility that appears to have left both business and consumers
traumatized, has raised an expectation that the Fed will step into the
breach once again following the September 20-21 FOMC meeting.
Likely in recognition of the opposition he faces in almost every
proposal the administration puts forward, Obama already directed federal
agencies to identify high priority infrastructure projects that will
create jobs and are ready to be implemented i.e they have already
secured the necessary funding and — importantly — do not require
congressional approval.
The permitting decisions and reviews for these projects can then be
expedited to get construction underway more quickly, Obama said.
Although the White House has refused to provide any advance details
of the president’s plan ahead of his speech before a joint session of
Congress, Obama himself made clear last week what the cornerstones of
his plan will be.
They are: tax cuts to encourage hiring, measures specifically
targeted to help the long-term unemployed, and investment to upgrade the
nation’s highways and other infrastructure projects — with the funding
placed directly under the control of state and local governments.
A potential mortgage refinance plan is also expected to be
announced by Obama, one that would make it mandatory for Fannie Mae and
Freddie Mac to refinance mortgages at lower rates, even if the mortgage
is underwater.
Varioius news reports say the package will cost several hundred
billion dollars, all of which the White House insists will be offset and
not add to the nation’s debt burden.
“As part of his proposal, the president will identify specific,
scorable measures that will ensure that the jobs and growth measures are
paid for,” Carney said. “He will identify elements that — will make
clear that the jobs and growth package can be acted on, should be acted
on, right away, and can be paid for and should be paid for right away.”
There have been some rumors that a repatriation holiday for U.S.
companies storing cash overseas will be included in the package but
given repeated opposition by members of the administration in the past,
including Treasury Secretary Timothy Geithner outside the context of
corporate tax reform, a change of heart still seems unlikely as a
standalone measure.
Republicans are already on the offensive ahead of Obama’s speech,
and a handful have made clear they will not be present when the
president speaks.
Senate Minority Leader Mitch McConnell said, “I have no doubt the
president will propose many things on Thursday that, when looked at
individually, sound pretty good, or that he’ll call them all bipartisan.
I’m equally certain that, taken as whole, they’ll represent more of the
same failed approach.”
House Majority Leader Eric Cantor, however, utilized more
conciliatory language Wednesday, telling reporters that Congress and the
White House must work together to “produce results” to spur the economy
and create jobs.
Lawmakers must now “focus like a laser on growth,” he said.
This does not automatically mean Republicans and Democrats will be
in complete agreement regarding what measures are needed to reduce the
massive ranks of the unemployed in the United States.
Republicans have not abandoned their commitment to rolling back
what they consider suffocating government regulation, lowering taxes,
and significantly reducing government spending.
A senior Treasury official, however, made it clear Wednesday that
the administration believes fiscal support in the near term is still
needed to ensure economic growth, which is critical for medium term
fiscal sustainability.
“Strengthening growth and putting people back to work among most
important things we can do to strengthen long-term fiscal situation,”
the official said.
So another battle appears to be brewing on the Hill over exactly
what kind of support should be given to the economy and the unemployed,
meaning despite whatever grand proposals Obama unveils, more attention
— and hope — will be on the words of Bernanke four hours earlier.
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: M$U$$$,MGU$$$,MFU$$$,M$$CR$,MMUFE$]
