Obama wants to use TARP for new jobs bill

Trapped between a bad economy and high deficits, President Obama on Tuesday promised more job relief and called for another round of stimulus-type funding - but teed up a political fight by calling for at least part of it to be funded with Wall Street bailout money.

Mr. Obama said that the Troubled Asset Relief Program will cost $200 billion less than planned and that some of the money could go to fund small-business relief. But he was unclear about how to pay for the rest of the package, which includes infrastructure projects, home weatherization, unemployment benefits and municipal aid.

“This gives us a chance to pay down the deficit faster than we thought possible and to shift funds that would have gone to help the banks on Wall Street to help create jobs on Main Street,” he said.

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Republicans were quick to pounce on Mr. Obama’s comments, describing the speech as proof the $787 billion stimulus plan that passed in February has failed. They argued that using extra bailout funds for anything other than paying down the debt would be illegal, given the way TARP was written.

“Out of ideas and out of touch, President Obama has chosen to double down on more of the same ‘stimulus’ spending that just isn’t working,” House Minority Leader John A. Boehner of Ohio said. “The president also refused to put a price tag on these new ‘stimulus’ initiatives, instead proposing to turn TARP into a slush fund for politicians and continue Washington Democrats’ unprecedented deficit-spending binge.” Mr. Obama did go into detail on a series of small-business measures, including a one-year elimination of the capital gains tax on investments for small firms and a one-year extension of stimulus provisions allowing companies to immediately expense up to $250,000 on investments and to deduct capital expenditures at a quicker pace.

He also called for a new tax cut to encourage businesses to hire new workers, but he did not indicate its size.

“Government can help lay the groundwork on which the private sector can better generate jobs, growth, and innovation,” Mr. Obama said in the speech at the Brookings Institution. “After all, small-business tax relief is not a substitute for ingenuity and industriousness by our entrepreneurs - but it can help those with good ideas to grow and expand.” Only 19 percent of American CEOs expect to increase their work force in the next six months, while 31 percent are planning to downsize, according to a Business Roundtable survey of business executives released Tuesday.

That’s an improvement over three months ago, when 13 percent predicted hiring additional employees and 40 percent anticipated layoffs.

Mr. Obama devoted a large portion of his remarks to promoting clean energy, with aides suggesting that tax incentives for energy-efficient home improvements could mirror the kind of consumer demand seen in the “cash for clunkers” program. As with other proposals in the speech, he left the size and scope of the incentives up to Congress.

The administration announced plans Tuesday night to host Democratic and Republican congressional leaders at the White House on Wednesday for a meeting on job creation.

Several top Democrats, including House Speaker Nancy Pelosi of California and Majority Leader Steny H. Hoyer of Maryland, have said they support redirecting TARP funds to create jobs, but deficit hawks are uneasy with the idea.

“I would have preferred the president to have proposed other ways to pay for his jobs package; using bailout money is much better than not paying for that package at all,” said Sen. Russ Feingold, Wisconsin Democrat.

Sen. John McCain said the TARP money is a line of credit to the Treasury to allow it to lend to troubled firms, and he contended that because it’s not traditional government spending, it can’t just be diverted.

“The TARP money is not there,” the Arizona Republican said. He and Sen. Tom Coburn, Oklahoma Republican, vowed they would instead support using hundreds of billions of dollars that still haven’t been spent from the $787 billion stimulus package to build infrastructure and try to help small businesses get lines of credit.

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