The ideas President Barack Obama is considering for his new jobs agenda could put hundreds of thousands of people back to work, and still have a limited impact in an economy that remains 6.8 million jobs behind its pre-recession peak, economists said. 
 
 Among the options Obama is considering is a version of a tax credit for new hires that could spur the creation of 900,000 additional jobs at a cost of $30 billion, according to an estimate by Michael Greenstone, an economics professor at the Massachusetts Institute of Technology and former chief economist for Obama’s Council of Economic Advisers. 
 
 “It allows the private sector to lead the economy toward the areas where the payoffs are greatest,” Greenstone said. 
 
 In discussions with the president, Obama’s economic team has strongly backed a tax incentive for new hires, said a person familiar with the deliberations. 
 
 Even so, the president’s capacity to dramatically improve the economy is limited after an $830 billion fiscal stimulus and almost three years of accommodative monetary policy from the Federal Reserve. Obama also confronts political constraints from Republicans in Congress opposed to further federal spending. 
 
 “The broad honest answer is that there’s a limited amount that he can do that I know of,” said Martin Neil Baily, a former chairman of the Council of Economic Advisers under President Bill Clinton. “We’ve kind of done a lot of the things we know how to do.” 
 
 Worker Retraining 
 
 The White House is considering more infrastructure spending, tax incentives to spur hiring, a reduction in the employer portion of the payroll tax credit and changes to unemployment insurance to subsidize worker retraining for inclusion in a jobs plan Obama is to announce next week, said a person familiar with the discussions. 
 
 Obama said at a White House ceremony yesterday he will use the moment to lay out proposals “to put more money in the pockets of working families and middle-class families, to make it easier for small businesses to hire people, to put construction crews to work rebuilding our nation’s roads and railways and airports and all the other measures that can help to grow this economy.” 
 
 Obama has spent much of the year pressing Congress to act on a familiar set of plans: renewal of a two-percentage-point cut in the employee-paid portion of the payroll tax and extended unemployment benefits, which are both scheduled to expire on Dec. 31; establishment of an infrastructure bank to fund public works spending; ratification of free-trade deals; and overhauling patent law. Obama has said those also will remain priorities. 
 
 Jobless Rate 
 
 More than two years after the recession’s official end, the jobless rate held at 9.1 percent in July, just one percentage point below its 10.1 percent peak in October 2009. Concern about the economy has increased in recent months as growth weakened during the first half of the year to its slowest pace of the recovery and financial markets turned tumultuous amid worries about the European debt crisis. 
 
 Federal Reserve Chairman Ben S. Bernanke said last week at the central bank’s annual Jackson Hole, Wyoming, symposium that U.S. growth “has, for the most part, been at rates insufficient to achieve sustained reductions in unemployment.” 
 
 Joel Prakken, senior managing director of Macroeconomic Advisers LLC in St. Louis, said he doesn’t “have high hopes -- really any hopes” of a significant boost to economic growth from Obama’s new jobs agenda. 
 
 Weak Private Sector 
 
 “We just don’t think that can make up for the fact that in the private sector demand is so weak right now,” said Prakken, who published an Aug. 24 analysis of Obama’s options based on media reports of items under consideration. 
 
 Still, Greenstone said, “The right test is not whether they will solve the overall unemployment crisis but whether they will improve the lives of hundreds of thousands of families, and these programs can do that.” 
 
 A $5,000 tax credit for new hires combined with a five- percentage-point reduction in payroll taxes on the net increase wages paid by a business would stimulate 900,000 additional new jobs, according to his analysis. The tax break would also wind up subsidizing about 5.1 million new hires that Greenstone forecasts will occur without the incentives. Consequently, the cost per additional job would be about $35,000 apiece, he said. 
 
 The White House hasn’t disclosed how a tax incentive for new hires would be structured, and its impact and cost would depend on details such as the amount of a credit. 
 
 Infrastructure Spending 
 
 While government-funded infrastructure spending would directly add jobs and boost overall economic growth, public works programs take time to ramp up and so would their impact on hiring, Prakken said. Even though Obama’s 2009 economic stimulus concentrated on “shovel-ready” projects, it was criticized for delays in getting people back to work. 
 
 Prakken estimates a $50 billion public construction program could only complete about $7.5 billion in work the first year. He estimates that would create 75,000 jobs in the first year and peak employment of about 125,000 in the second and third years. That is about the same as the average monthly growth in payrolls so far this year. 
 
 Jared Bernstein, Vice President Joe Biden’s former chief economic adviser and now a fellow at the Center for Budget and Policy Priorities, said a public works program targeted at refurbishing dilapidated schools could have greater immediate impact. 
 
 Bernstein said low-income school districts have a deep backlog of repairs needed. Work such as roof repairs, insulation, weatherization and window replacement require more workers than most infrastructure spending, he added. 
 
 He estimates $50 billion spent on school renovations could create 500,000 jobs within 12 to 24 months. 
 
 John Makin, an economist at the American Enterprise Institute, a Washington policy research group that supports low taxes and market-driven policies, said he doubted any of the measures would lead to a sustained improvement in employment. 
 
 “These short-term stimulus measures haven’t been working,” Makin said. “When you take them away, growth goes back down again.” 
 
 To contact the reporter on this story: Mike Dorning in Washington D.C. at mdorning@bloomberg.net. 
 
 To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net. ||||| President Barack Obama plans to propose sparking job growth by injecting more than $300 billion into the economy next year, mostly through tax cuts, infrastructure spending and direct aid to state and local governments. 
 
 Obama will call on Congress to offset the cost of the short-term jobs measures by raising tax revenue in later years. This would be part of a long-term deficit reduction package, including spending and entitlement cuts as well as revenue increases, that he will present next week to the congressional panel charged with finding ways to reduce the nation’s debt. 
 
 Almost half the stimulus would come from tax cuts, which include an extension of a two-percentage-point reduction in the payroll tax paid by workers due to expire Dec. 31 and a new decrease in the portion of the tax paid by employers. 
 
 Obama is set to lay out his plans in an address to Congress tomorrow as unemployment remains at 9.1 percent more than two years after the official end of the worst recession since the Great Depression. Payroll growth stalled last month. 
 
 The unemployment rate and the sluggish recovery will be central issues as Obama runs for re-election next year. Former Massachusetts Governor Mitt Romney, a leading Republican seeking the party’s nomination to face Obama in November 2012, yesterday offered his own 59-point economic plan, including tax cuts for those making $200,000 or less a year. He and seven other Republican candidates are scheduled to debate tonight in California. 
 
 Plan Previewed 
 
 The main components of Obama’s jobs plan, though not its scale, have been largely telegraphed by the administration. For weeks, people familiar with deliberations have said the White House is considering tax incentives, infrastructure and assistance to local governments. Obama has stressed construction and tax cuts in recent public speeches 
 
 Obama has pressed Congress throughout the year to renew the payroll tax holiday along with extended unemployment benefits, which also expire Dec. 31. Backing for a reduction in the employer contribution to the payroll tax has been under consideration since at least June. 
 
 Obama’s jobs plan follows the contours of his $830 billion 2009 economic stimulus package, which also stressed tax cuts, infrastructure spending and assistance to local governments. Still, tax cuts would account for a larger portion of the proposal he will lay out this week. 
 
 ’New Proposals’ 
 
 White House press secretary Jay Carney refused to give details of what the president will offer, saying at a briefing yesterday that it would include “some new proposals that you have not heard us talk about.” 
 
 Much of Obama’s plan may have trouble passing the U.S. House, where leaders of the Republican majority have signaled opposition to new spending that would add to the federal budget deficit. House Speaker John Boehner of Ohio and Majority Leader Eric Cantor of Virginia released a letter to Obama yesterday saying their objections to the 2009 stimulus, which they called a “large, deficit-financed, government spending bill,” have been validated by continued high unemployment. 
 
 Obama said in a Sept. 5 speech in Detroit that he would challenge Republicans to support tax cuts, which a person familiar with administration discussions said would be targeted toward middle-class Americans to spur consumer spending. 
 
 Local Government Aid 
 
 “You say you’re the party of tax cuts?” Obama said before the annual Metro Detroit Central Labor Council rally. “Well then, prove you’ll fight just as hard for tax cuts for middle- class families as you do for oil companies and the most affluent Americans.” 
 
 The direct aid to local governments would focus on halting layoffs of teachers and first responders. Education will be a theme in Obama’s address, and he will also propose as part of his infrastructure program money for school construction. Some of the infrastructure spending would go toward roads, bridges and other surface transportation projects. 
 
 White House officials say they anticipate congressional Republicans may go along with some of the tax cuts Obama is seeking, including the extension of the payroll tax cut. Still, they expect to meet Republican resistance to much of the package. 
 
 Job Training 
 
 To address the problem of long-term unemployment, Obama will likely propose a national program, modeled after a Georgia initiative that allows workers who receive unemployment insurance to train for jobs at businesses at no cost to the employer. Obama, at a town-hall meeting in Atkinson, Illinois, last month, called the Georgia Works initiative a “a smart program.” 
 
 Obama also plans to propose measures to make it easier for homeowners to refinance mortgages. 
 
 Obama will unveil a framework for the deficit reductions next week, including changes to Medicare and Medicaid, in addition to other cuts in contributions to military pensions and farm subsidies. 
 
 After a partisan fight over the deficit and raising the government’s debt limit took the country to the brink of default, Standard & Poor’s lowered the U.S.’s credit rating to AA+ from AAA on Aug. 5. The rating firm said the government is becoming “less stable, less effective and less predictable.” Even so, the government’s borrowing costs fell to record lows as Treasuries rallied. The yield on the benchmark 10-year Treasury note fell from 2.56 percent on Aug. 5 to 1.97 percent yesterday. The note added seven basis points to 2.05 percent today. 
 
 Top Rankings 
 
 Moody’s Investors Service and Fitch Ratings affirmed their top rankings on the U.S. 
 
 Concern over the economy has increased as growth weakened during the first half of the year to its slowest pace of the recovery and market pessimism has risen over the ramifications of the European debt crisis. 
 
 Still, stocks rebounded from a four-day global slump that drove valuations to the lowest level since 2009 following news of Obama’s plans. The MSCI All-Country World Index surged 2.1 percent at 10:21 a.m. in New York and the Standard & Poor’s 500 Index jumped 1.7 percent. 
 
 Recent signs of economic weakness have led private economists to raise forecasts for the unemployment rate next year. The median forecast for unemployment during next year’s fourth quarter, when the presidential election will be held, is 8.5 percent, according to 51 economists surveyed by Bloomberg News Aug. 2 through Aug. 10. 
 
 Since World War II, no U.S. president has won re-election with a jobless rate above 6 percent, with the exception of Ronald Reagan, who faced 7.2 percent unemployment on Election Day in 1984. The jobless rate under Reagan had come down more than 3 percentage points during the prior two years. 
 
 To contact the reporter on this story: Albert Hunt in Washington at ahunt1@bloomberg.net 
 
 To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net. ||||| In a last-gasp attempt to jolt the economy and his reelection prospects, President Barack Obama on Thursday put forward a $447 billion jobs package, challenging Congress to shut down the “political circus” and pass his bill as soon as possible. 
 
 After three weeks of buildup, Obama delivered the speech amid high stakes, potentially one of his last major opportunities to wrest the economic debate back from Republicans and reenergize the economy after months of sputtering growth. But expectations that the entirety of his plan would prove palatable to the Republican-controlled House remained low. 
 
 Text Size - 
 
 + 
 
 reset Jobs address highlights Pundits react to jobs speech POLITICO 44 
 
 Obama disregarded that political reality and called on Congress to approve his American Jobs Act “right away,” a phrase he repeated eight times in the 34-minute speech. Speaking in an urgent, clipped tone, he pitted lawmakers against their constituents, saying Americans can’t wait while Washington plays games. 
 
 “The people of this country work hard to meet their responsibilities. The question tonight is whether we’ll meet ours,” Obama said. “The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy, whether we can restore some of the fairness and security that has defined this nation since our beginning.” 
 
 House Republican leaders didn’t dismiss the proposal outright — a contrast to Republicans such as Senate Minority Whip Jon Kyl (R-Ariz.), who described it as a “tired agenda of old ideas wrapped in freshly partisan rhetoric.” 
 
 “The proposals the president outlined tonight merit consideration,” House Speaker John Boehner (R-Ohio) said in a statement. “We hope he gives serious consideration to our ideas as well. It’s my hope that we can work together to end the uncertainty facing families and small businesses, and create a better environment for long-term economic growth and private-sector job creation.” 
 
 Obama will send a bill to Congress next week, but House leaders signaled that they won’t consider it as a single package. Majority Leader Eric Cantor (R-Va.) said he will split off several smaller initiatives and pass them immediately. 
 
 The president went bigger than expected with his $447 billion plan, a mix of tax cuts, state aid, jobs programs and construction projects that satisfied many Democrats but few Republicans, given its resemblance to the 2009 stimulus bill. 
 
 In the speech, he tried to check several political boxes. He served red meat to his Democratic base with a gritty delivery and big-dollar government programs. He appealed to independents by pledging to pay for the full package. And he sought to put Republicans on the spot by offering up tax cuts that could be hard to block. 
 
 “This package of common-sense, bipartisan proposals will present a litmus test to Republicans,” Senate Majority Leader Harry Reid (D-Nev.) said in a statement. “I hope they will show the American people that they are more interested in creating jobs than defeating President Obama.” ||||| The Senate on Saturday morning approved a two-month extension of a payroll tax break and jobless benefits, easily passing a year-end legislative package that also forces President Barack Obama to make a controversial decision on a major oil pipeline in the thick of his reelection campaign. 
 
 By an 89-10 vote, senators approved the $33 billion plan as part of a final round of action that will conclude an acrimonious year of legislating in the divided Congress. Seven Republicans, one independent and two Democrats voted against the plan. Sen. Rand Paul (R-Ky.) missed the vote because he was attending his niece’s wedding in Texas. 
 
 Text Size - 
 
 + 
 
 reset 
 
 The House is expected to take up the proposal in the coming days, where some top Republicans have voiced concern about a short-term extension. 
 
 Speaking at the White House, Obama signaled he would sign the short-term deal but said it would be “inexcusable for Congress not to further extend this middle-class tax cut for the rest of the year.” 
 
 “It should be a formality,” he told reporters. “And hopefully it’s done with as little drama as possible when they get back in January.” 
 
 The vote came moments after Senate Majority Leader Harry Reid (D-Nev.) conceded that senators did not have an official estimate of the plan, an admission that served to underscore the frantic nature of the talks and the much-criticized legislative process employed by this Congress. The Congressional Budget Office later said it would reduce the deficit by $3 billion over the next decade. 
 
 Extending the 4.2 percent payroll tax holiday is one of Obama’s top priorities because it would ensure many families don’t pay on average an extra $1,000 a year in taxes next year. The proposal also would avert a scheduled 27 percent pay decrease for physicians serving Medicare patients, extend jobless benefits for millions of Americans and a welfare program. They will be paid for by increasing guarantee fees for 10 years on mortgages backed by Fannie Mae and Freddie Mac. 
 
 The two-month extension of the payroll tax holiday would cost the government $20.4 billion in lost revenue; unemployment benefits costs $8.3 billion; and the so-called “doc fix” costs $4.1 billion. The new Fannie and Freddie fees cut the deficit by $35.7 billion. 
 
 The provisions are slated to expire on Feb. 29, ensuring that Congress will fight again over these programs after it returns from its scheduled holiday recess. 
 
 “Getting two months is a lot better than zero which is what some people in here wanted,” said Sen. Bob Casey (D-Pa.), gesturing at the Senate chamber. 
 
 But not everyone was happy. 
 
 Sen. Joe Manchin (D-W.Va.), who voted against the plan, said he was “furious and disgusted” at the two-month extension, saying the Social Security trust fund shouldn’t be used to pay for the break and that punting a problem for another two months is emblematic of Washington’s inability to solve tough problems. 
 
 “I think we’re robbing Peter to pay Paul, and we don’t have any money to pay Peter back,” said Sen. Orrin Hatch (R-Utah). “That bothers me a lot.” 
 
 In a significant concession, Democrats agreed to a provision that would force the administration to make a decision on permitting the Keystone XL pipeline within 60 days. He can choose not to permit the project if he determines it’s not in the national interest. 
 
 The administration has said it needs more time to review the project, which has split his labor and environmentalist base and united Republicans and industry groups. ||||| WASHINGTON — Capping a year of last-minute, half-loaf legislation, the Senate voted overwhelmingly on Saturday to extend a payroll tax cut for only two months, with the chamber’s leaders and the White House proclaiming victory, even as they punted into the new year the issue of how to further extend the tax cut and unemployment benefits. 
 
 In an unusual Saturday vote, the Senate approved by an 89-to-10 vote a $33 billion package that would extend a payroll-tax holiday for millions of American workers, extend unemployment benefits and avoid cuts in payments to doctors who accept Medicare. The measure would be effective through February, when Congress could again be locked in battle over whether and how to extend those provisions. 
 
 The legislation — should it get through the House — mirrors a series of 11th-hour deals devised by the 112th Congress that appeared to solve an impending crisis, but simply pushed the issues forward. 
 
 But House passage next week was thrown into serious doubt on Saturday afternoon, when a number of rank-and-file Republicans objected in a conference call with Speaker John A. Boehner, who tried to persuade them that it was good for their party, particularly the provision that would speed the decision process for construction of an oil pipeline from Canada to the Gulf Coast known as Keystone XL. Just a week ago, President Obama had threatened to veto that provision. 
 
 “I think the American people are not going to be too pleased about this,” said Representative Tom Graves of Georgia. “I would say it has a very steep uphill fight in our conference. It’s a joke.” 
 
 Representative Trey Gowdy of South Carolina complained: “The House has capitulated to the Senate too often this year, in our judgment. It is time to stand on principle and fight. And if that means spending Christmas away from home, others have sacrificed far more than that for principle.” 
 
 Some other Republican conference leaders, including the House majority leader, Representative Eric Cantor of Virginia, also criticized of the two-month extension. 
 
 Many House Republicans dislike the payroll tax cut holiday because it takes money away from the Social Security trust fund, which then must be reimbursed with general fund dollars. They also objected that several policy riders that they and conservative voters hold dear had been stripped out. 
 
 Mr. Obama acknowledged Saturday that a two-month extension would mean Democrats and Republicans could be fighting the same fight again in February. In remarks before the White House press corps, the president said that next year’s vote should be a “formality,” and that he expected that Congress would accomplish his goal of a one-year extension “with as little drama as possible when they come back next month.” 
 
 Any thought that Congress will agree on a yearlong tax-cut extension or on the other provisions is extremely optimistic, given that its work will overlap with Mr. Obama’s State of the Union speech, the heat of the Republican primaries and a presidential campaign hitting full stride. 
 
 Republicans, seizing on the deficit-cutting mantra they heard from the voters who helped them gain sweeping control of the House in 2010, spent much of the last year successfully pushing for vast spending cuts and maintaining the Bush-era tax cuts for all Americans, including the wealthy. Now, the dynamic has shifted somewhat, with a nearly equal focus in the nation on income disparity, an issue Democrats believe they can seize on. “I think we will be on higher and higher ground,” said Senator Charles E. Schumer of New York, the third-ranking Senate Democrat, “because the focus in 2012 is going to be on the middle class.” 
 
 Continuing another theme of this Congress, Republican leaders — but not necessarily their rank and file — had wanted a full-year payroll tax cut deal to try to inoculate themselves against accusations by Democrats, as they head into an election year, that they are against tax cuts for low- and middle-income workers. It will be up to Mr. Boehner to convince his members that extending the cut — and at least appearing to work with Democrats even as they labor to unseat Mr. Obama and the Democrats who still control the Senate — will ultimately work in their political favor. 
 
 Mr. Obama, in agreeing to a two-month fix, is betting that Congress, in an election year, will not want to run the political risk of raising taxes. 
 
 During a briefing with reporters Saturday, senior administration officials repeatedly referred to Congress’s low approval ratings with American voters, saying that it would be political suicide for Republicans to turn around next February and not extend the tax cut. “You’ve got to look at the forest,” one senior administration official said, speaking on condition of anonymity under guidelines established by the White House before the briefing. “The forest remains that these guys have a weak economy, and they’re going to be running next year.” 
 
 Despite Mr. Obama’s veto threat of any legislation that tried to tie approval of the Keystone pipeline to the payroll tax-cut extension, White House officials said they were sanguine that at the end of the day, Mr. Obama would not find himself forced to fast-track the pipeline. 
 
 The State Department has already put off a decision on Keystone pending changes in the route and further environmental reviews, and has indicated that any attempts to hasten the project will most likely result in its disapproval, a warning White House officials gleefully repeated time and again on Saturday. 
 
 Still, for Mr. Obama, the Keystone project now remains tied to the payroll-tax cut extension, which puts the president at risk in an election year of appearing to coddle the environmental groups who form part of his Democratic base at the expense of the 160 million Americans who the White House says would benefit from continuing the tax cut. 
 
 Mr. Obama’s aides said Saturday that he was delaying his departure for Christmas vacation in Hawaii until what had been expected to be next week’s House vote on the two-month payroll tax extension. If Republican leaders cannot quell a rebellion by their rank-and file, that could also be delayed. But the threat of a government shutdown was averted Saturday when the Senate gave final passage to a $1 trillion bill to finance the Departments of Defense and Homeland Security and other agencies.
– President Obama made his pitch to Congress this evening for what he's calling the American Jobs Act, a wide-ranging proposal whose centerpiece is an expansion of the payroll tax break (he figures it's worth $1,500 a year to the average family), along with more spending on school and road projects. The biggest surprise, says the New York Times, is probably the total cost: about $450 billion. But "everything in this bill will be paid for," insisted Obama. "You should pass this bill right away." (Politico notes that he repeated the "right away" phrase eight times during the speech.) Excerpts, with the full text here: “The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy.” The plan "will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed. It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business." "There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans—including many who sit here tonight." "Ultimately, our recovery will be driven not by Washington, but by our businesses and our workers. But we can help. We can make a difference. There are steps we can take right now to improve people’s lives." Related: Eric Cantor suggested Republicans are open to extending the payroll tax holiday, notes the Los Angeles Times, and John Boehner said Obama's proposals "merit consideration," adds Reuters.