Obama Confronts Job-Creation Limits as Employment Summit Opens

President Barack Obama will show the limits of his ability to attack unemployment as he hosts a job- creation summit at the White House today.

The forum will assemble economists, union heads and business leaders such as Eric Schmidt, chief executive officer of Mountain View, California-based Google Inc., and Fred Smith of Memphis, Tennessee-based FedEx Corp. With the nation’s unemployment rate at a 23-year high of 10.2 percent, Obama will solicit feedback on job-creation proposals such as incentives to make homes more energy efficient, increased access to financing for small business and tax credits for companies.

None of those measures will be a substitute for economic growth, said Rose Wang, a forum participant who is chief executive officer of Binary Group Inc., an Arlington, Virginia- based technology consulting company.

“We’re not hiring until we see some new contracts coming in,” Wang said. “I’m a believer in revenue growth and until I see a real trend picking up, I will be very concerned in terms of spending money.”

The companies that will be represented at the White House, including Dallas-based AT&T Inc., Chicago-based Boeing Co. and New York-based Pfizer Inc., provide a snapshot of the nation’s employment woes, having cut more than 36,000 jobs this year, according to data compiled by Bloomberg.

‘Sense of Urgency’
Valerie Jarrett, a senior White House adviser, said the president “feels a sense of urgency” about unemployment and the summit is part of an “ongoing effort to jumpstart the economy and create jobs.” She said other forums would be organized around the country.

At the same time, Jarrett said the administration is constrained by a budget deficit that reached a record $1.4 trillion in the fiscal year that ended Sept. 30 and is projected to be $1.4 trillion again this year.

“There are definite limitations to what the federal government can do,” she said in an interview.

The U.S. economy grew at a 2.8 percent annual pace in the third quarter; the unemployment rate is expected to remain at 10.2 percent for November and may continue to rise in 2010, according to a Bloomberg survey.

“I think the unemployment rate will peak sometime next summer, on a monthly basis around 11 percent,” Mark Zandi, chief economist with Moody’s Economy.com, said in an interview.

Stimulus

Obama earlier this year pushed through Congress a $787 billion economic stimulus package that his administration said would hold unemployment below 8 percent.
An analysis by the nonpartisan Congressional Budget Office said the stimulus generated between 600,000 and 1.6 million jobs and lowered the nation’s unemployment rate by between 0.3 and 0.9 percentage points, even as that rate rose into double digits.

“You’re in a position of a doctor that prescribed aspirin and says ‘this will bring down your fever’ and instead of 105 you have 101, but you still have a fever,” said Alan Blinder, a Princeton University economist and former Federal Reserve vice chairman who will be among the 130 participants in today’s forum.

Jarrett said the topics of the six breakout sessions “telegraph” the policy areas the administration is exploring to promote job growth, including encouraging investment in energy efficiency, infrastructure, and job retraining.

Export Growth

David Ickert, vice president of finance for Air Tractor Inc., will be attending the session on export growth. He said his Olney, Texas-based company makes airplanes for agriculture and fire-fighting and would be helped by simplified trade rules and access to financing for exports.

Wang of Binary Group said she would also press for better financing access, including through the Small Business Administration, a strategy Obama endorsed Oct. 21.

Administration officials have also suggested that tax credits to offset some of the costs of hiring are under consideration, as well as direct aid to state or local governments.

“Providing more help to state and local governments would make sense,” Zandi said. “If they don’t get it they will be cutting jobs, a lot of jobs. I think that would be an easy very effective step.”

No Timetable
Jarrett said there is no timetable for determining which of the options will be submitted to Congress as policy proposals. Summit attendee Robert Greenstein, executive director of the Center on Budget and Policy Priorities in Washington, said he expects Obama to make recommendations before his State of the Union Address early next year.

Republicans said any proposals would meet resistance in Congress, where concerns have grown about the deficit after Obama announced this week that he will seek $30 billion in new spending in Afghanistan and is pushing health-care legislation that is projected to cost almost $900 billion over 10 years.

Republican lawmakers criticized the first economic stimulus measure as ineffective and said the administration inflated the program’s success after an investigation by a Congressional watchdog found “significant reporting and quality errors” in a tally of jobs created or saved.

“The White House claimed that if we passed the trillion- dollar stimulus, unemployment would stay below 8 percent and jobs would be created immediately,” said Republican House Leader John Boehner of Ohio, who is holding a competing jobs forum today with lawmakers and economists.


News Source: bloomberg.com


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