Obama steps up push for added economic stimulus

* Democrats in Congress cautious of spending

* Republicans accuse Obama of going on “spending spree”

* Obama says last year’s stimulus averted collapse

By Caren Bohan and Lisa Lambert

WASHINGTON, June 13 (BestGrowthStock) – President Barack Obama and
his aides are stepping up a push for further government
spending to boost the U.S. economy as signs grow of the
recovery’s fragility.

The White House is calling for Congress to urgently pass
measures to extend jobless benefits, aid cash-strapped states
and provide targeted tax breaks to encourage research and
development by businesses.

Obama’s Democratic allies, facing congressional elections
in November, have grown cautious about additional spending.
Seizing on voter anxiety about deficits, Republicans have cast
the administration’s policies as fiscally reckless as they seek
to challenge Democratic majorities in both houses of Congress.

“People are suffering out there. We want to keep this
economy growing faster. We want to see an acceleration of job
creation. And we have to take some steps to continue in that
direction,” top White House adviser David Axelrod told NBC’s
Meet the Press on Sunday.

His comments came a day after Obama wrote to congressional
leaders, urging them to move swiftly to approve new measures to
“spur job creation and build momentum toward recovery.”

Senate Democrats have introduced legislation that would
renew expiring unemployment benefits, and extend business and
individual tax breaks. They would offset some of the bill’s
costs by raising taxes on hedge fund managers and other steps.

The bill complements one passed in the House of
Representatives last month, which would authorize about $80
billion in new spending and add $31 billion to the deficit. The
cost of the Senate version has not been estimated yet.

Obama also backs a separate measure that would provide cash
to states to prevent teacher layoffs but a $23 billion version
of that legislation recently failed in the Senate.

“What the president is saying is, we need to expend
additional dollars to make sure that we don’t have significant
layoffs,” House of Representatives Majority Leader Steny Hoyer,
a Democrat, told ABC’s “This Week.”


But Hoyer acknowledged growing concern about the U.S.
deficit, which reached $1.4 trillion in 2009 and which the
White House projects will hit $1.6 trillion in 2010.

“I think it’s accurate that there’s spending fatigue, not
only on Capitol Hill, but around the country. People are
concerned about the debt level, and we are, as well,” Hoyer
said. “But clearly, you cannot not continue to stimulate an
economy that is still struggling to get out of the deep ditch
that we found it in about 18 months ago.”

In his letter to lawmakers, Obama said last year’s $863
billion stimulus halted a freefall in the U.S. economy after
the worst financial crisis since the 1930s Great Depression.

The jobless aid and many of the other steps under
consideration would extend provisions in last year’s stimulus
package, which Republicans have derided as a wasteful,
big-government approach to economic policymaking.

The letter went to House Speaker Nancy Pelosi and Senate
Majority Leader Harry Reid, both Democrats, along with House
Republican leader John Boehner and Senate Republican leader
Mitch McConnell.

Obama warned that without additional aid, states could be
forced to enact “massive layoffs” of teachers, firefighters and
other employees.

Last week, state governors pressed Congress to extend a
measure that temporarily increased the funds the federal
government sends them for Medicaid, the healthcare program for
the poor that eats up 20 percent of state budgets on average.

Without the six-month extension, estimated to cost $24
billion, states would be forced to lay off thousands of
workers, the governors said. The extension was stripped from
the jobs bill passed in the House but is included in the Senate
bill. [ID:nN1023809]

“I’m concerned about the plight of teachers, firemen,
policemen who face the real possibility that they may be laid
off,” Boehner said on “This Week” but he added such spending
needed to be offset.

Boehner criticized what he said was a “spending spree in
Washington” that has “run unabated.”

Adding to concerns about the tepid recovery, the government
reported on Friday that retail sales unexpectedly fell in May
for the first time in eight months.

A week earlier, the May employment report showed businesses
scaling back on hiring after a spurt in the prior two months.
Private-sector payrolls grew only by 41,000 after expanding by
218,000 in April. Unemployment fell to 9.7 percent from 9.9
percent in April.

Economists fear the U.S. recovery could be further dampened
by fallout from the European crisis that began in Greece.

“We don’t take anything for granted. We have to keep
pushing forward and we should not be careless about pulling out
of our stimulative efforts too quickly,” Axelrod said.

He raised the example of Japan’s economic stagnation and
deflation in the 1990s to warn of the dangers the United States
could face if it allows the stimulus to lapse too quickly.

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(Additional reporting by Lisa Lambert; Editing by Alan

Obama steps up push for added economic stimulus