Obama weighs more spending vs. deficit cuts

WASHINGTON - To spend or not to spend? That is the question that is pressing President Obama.

While gushing red ink as it spends billions to stimulate the economy, the Obama White House wants to spend more to create jobs, and it faces growing pressure from labor unions and liberal groups to keep the federal spigot open to help the jobless and to save Americans' endangered jobs.

But Obama also faces a growing number of Americans who say he is making the economy worse, not better. Congress - skittish about a voter backlash in an election year, when incumbents already are falling to challenges from the right and left - appears torn between spending more to create jobs and pulling back to keep from adding to the national debt.

Underlying it all, Americans are growing more skeptical of the president's economic program. In a poll released Tuesday, the Pew Research Center found the ranks of people who think that Obama's policies are making things worse has risen to 29 percent from 16 percent a year ago.

At the same time, 23 percent said Obama was making the economy better, down slightly from 26 percent a year ago.

"The public increasingly sees Barack Obama's policies as having an impact on economic conditions," Pew said. "And for the first time, slightly more say the impact has been more negative than positive."

Key to public perception: The jobless rate remains high, at 9.7 percent.

A debt crisis in Greece that has sent shivers across Europe has heightened awareness at home of soaring annual federal budget deficits and rising U.S. debt. The deficit is likely to hit $1.5 trillion this year, adding to a gross federal debt of more than $13 trillion.

The president remains firmly committed to the $862 billion stimulus package that was enacted last year, which is still spending money to spark the economy.

Lest he wobble, labor unions and liberal groups are pressing for more. Robert Borosage, codirector of the liberal Campaign for America's Future, complained this week that the stimulus package and other measures such as overhauling health care were too small.

The president supports spending more to create jobs in legislation that is pending before Congress, but those plans are being downsized in response to deficit pressures. A $200 billion plan in the House to boost jobs met resistance from freshman lawmakers who are worried about reelection, and was reduced.

"There is a very . . . changed climate in terms of the size of the spending," House Speaker Nancy Pelosi said.

In the Senate, Democrats on Tuesday scaled back plans to extend unemployment benefits for the jobless and to help states pay teachers' salaries, though final terms remain in flux.

Gerald McEntee, president of the American Federation of State, County and Municipal Employees, said that a proposal to spend $24 billion to help states was in jeopardy, and with it as many as one million jobs. He urged Obama and congressional Democrats to put off worries about the deficit until later.

"The only way we can get our economy back on track is to keep Americans working," he said. "Without help from the federal government, states will be forced to begin massive layoffs in July."

In a largely symbolic bow to concerns about the deficit, the administration said Tuesday it would cut spending at some government agencies by 5 percent starting in October 2011. But those yet-to-be-specified cuts would offset other spending increases, and leave agencies' overall budgets still meeting a freeze that the president outlined earlier.

"We are asking non-security agencies to specify how they would reduce their budgets by 5 percent, which will give us the ability to achieve the overall non-security freeze even while meeting inevitable new needs and priorities," White House budget director Peter Orszag said.

Republicans urged Obama to send proposed spending cuts to Congress now or move to rescind appropriations already enacted. "The two things that are growing fastest in this Democrat economy are the size of the federal government and the crushing burden of the national debt," said Senate Republican leader Mitch McConnell.