Prez hopes to seal up jobless woes

WASHINGTON - President Obama yesterday called for a major new burst of federal spending, aiming to jolt the wobbly economy into a stronger recovery and to reduce painfully persistent double-digit unemployment.

Despite Republican criticism concerning record federal deficits, Obama said the U.S. must continue to "spend our way out of this recession" as long as so many people are out of work. More than seven million Americans have lost their jobs since the recession began two years ago, and the jobless rate stands at 10 percent, a statistic Obama called "staggering."

Congressional approval would be required for the spending, the amount unspecified but sure to be at least tens of billions of dollars.

"We avoided the depression many feared," Obama said in a speech at the Brookings Institution, a Washington think tank. But, he added, "Our work is far from done."

It was the third time in a week he had presided over a high-profile event on jobs, responding to rising pleas in Congress that he spend more time discussing unemployment as midterm-election season draws near.

Obama proposed new spending for highway and bridge construction, for small-business tax cuts and for retrofitting millions of homes to make them more energy-efficient. He said he wanted to extend economic-stimulus programs to keep unemployment insurance from expiring for millions of out-of-work Americans and to help laid-off workers keep their health insurance. He proposed an additional $250 apiece in stimulus spending for seniors and veterans and aid to state and local governments to discourage them from laying off teachers, police officers and firefighters.

He did not give a price tag for the package but said he would work with Congress on deciding how to pay for it.

Obama also proposed an elimination of fees on loans to small businesses, coupled with federal guarantees of those loans through the end of next year. His proposal for new tax breaks for energy-efficient retrofits in homes is modeled on the now-expired Cash for Clunkers rebates for trading in used vehicles for more fuel-efficient vehicles. Some administration officials have dubbed the proposed new program "Cash for Caulkers."

Proposals in Congress being advanced by Democratic leaders that cover much the same ground would add up to $170 billion or more. Administration aides suggested the infrastructure proposals alone could cost $50 billion.

To find money to pay for the programs, the administration is pointing to the Treasury Department's report on Monday that it expects to get back $200 billion in taxpayer-approved bank-bailout funds faster than expected.

Obama suggested this windfall would help the government spend money on job creation at the same time it eats into the nation's debt, which now totals $12 trillion.

The perception that the program mainly bailed out Wall Street bankers while doing little to help ordinary Americans has fed anti-Washington sentiment across the nation.

Republicans ridiculed the president's speech and his parallel call for doing more to hold down government deficits.

"At least the president's proposal will result in one new job: He'll need to hire a magician to make this new deficit spending appear fiscally responsible," said Sen. Judd Gregg of New Hampshire, the senior Republican on the Senate Budget Committee.