WASHINGTON — Anticipation of President Barack Obama's plan for creating jobs while cutting deficits, now heightened by the controversy over his speech to Congress next Thursday, has turned on an either-or question: Will he go big and highlight his differences with Republicans, or will he be pragmatic and downsize his ideas to get GOP votes?
The challenge for Obama is that he must do both.
Despite Republican opposition to spending or tax cuts to spur job creation and economic growth, the president is under pressure to fight for a significant stimulus program. The demands come not only from Democrats who see political and economic benefits to such an approach, but also from many economists, financial analysts and business executives who increasingly fear a relapse into recession.
But as administration officials are well aware, another display of partisan gridlock between the White House and Congress this fall could spell trouble, possibly provoking downgrades of U.S. credit by ratings firms and upheavals in the markets that would further batter business and consumer confidence.
According to people familiar with the White House's planning, Obama will focus his speech on the specifics of his immediate job-creation plans, but leave the details of his longer-term debt-reduction program for perhaps the following week. They say he does not want to dilute the political impact of his jobs message with potential controversies, especially with his Democratic base, over deficit-reduction ideas like raising the retirement age for future Medicare beneficiaries.
The signals from the White House and Democrats close to it suggest Obama's agenda will not be so bold as to satisfy many liberals clamoring for New Deal-style programs of direct government spending.
Still, Democrats and administration officials say Obama's plan will be far more ambitious than would have been expected just months ago, given the weakening economy. He has concluded, Democrats say, that Republicans will oppose anything he proposes anyway, at least initially, and with an election looming, Obama must make clear what he stands for.
Expected among those stimulus proposals is an extension for another year of the payroll tax cut for workers that Obama and Republicans agreed to last December, which has meant $1,000 more this year for the average family. And he is expected to propose a separate tax credit for employers who increase their payrolls, though some Democrats say the credit will simply reward businesses that would hire anyway.
Obama also will propose spending for infrastructure projects. He is expected to again propose an infrastructure bank to support work on roads, bridges, airports, schools and other public works. Because such a bank would take up to 18 months to get under way, Obama has indicated he will propose other ways to support such work quickly.
To hold down federal costs, and to avoid having to go to Congress, Obama and his advisers have been looking for ways to divert existing government money to purposes that will create jobs, especially in the hard-hit construction industry. School repairs and retrofitting buildings for energy efficiency will be a focus. And Obama is expected to argue that to the extent that states and local governments are relieved of school construction costs, they must avoid further layoffs of teachers.