- The Washington Times - Tuesday, December 8, 2009

Trapped between a bad economy and high budget deficits, President Obama on Tuesday called for a series of small fixes from a one-year capital-gains tax break for small businesses to incentives for consumers to make their homes more energy-efficient — but he said Congress will have to work out the details.

Seizing on a recent report that last year’s Wall Street bailout will cost at least $200 billion less than previously thought, Mr. Obama said some money from the $700 billion Troubled Assets Relief Program (TARP) should be redirected toward encouraging small-business growth, but he also promised that some of the funds also would be used to reduce the deficit.

“There are those who claim we have to choose between paying down our deficits on the one hand and investing in job creation and economic growth on the other,” Mr. Obama said in a speech before the Brookings Institution. “But this is a false choice. Ensuring that economic growth and job creation are strong and sustained is critical to ensuring that we are increasing revenues and decreasing spending on things like unemployment so that our deficits will start coming down.”

The speech did not include any specific cost figures.

Mr. Obama’s proposals focused on small business, infrastructure and clean energy — many of which are a continuation of policies in the $787 billion stimulus bill passed in February.

But congressional Republicans have painted discussions of a new jobs bill as a tacit admission that the stimulus has failed, and have questioned the legality of redirecting funds from TARP. Sen. John McCain, Arizona Republican, said the TARP money is a line of credit to the Treasury to allow it to lend to troubled firms, arguing that, since it’s not traditional government spending, it can’t just be diverted to other purposes.

“The TARP money is not there,” Mr. McCain said.

He and Sen. Tom Coburn, Oklahoma Republican, said they instead would 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.

Mr. Obama, too, said he’s worried about the ability of small-business owners to get credit, and said he has told Treasury Secretary Timothy F. Geithner to use remaining TARP funds to work on the problem.

Also on small business, the president called for a one-year elimination of the capital gains tax on new investments as well as an extension of a stimulus provision that accelerates the rate at which businesses can deduct capital expenditures. He also pushed for a one-year tax credit to encourage small firms to make new hires.

Mr. Obama called for new investments in roads, bridges and other infrastructure through a combination of grants and loans based on merit.

On the eve of his trip to Copenhagen for the international summit on global warming, Mr. Obama plugged energy-efficiency incentives as a way to create jobs and enhance the country’s global leadership. In addition to rebates for consumers who weatherize their homes, he said he supports tax incentives for investments in renewable-energy manufacturing.

“We know the nation that leads in clean energy will be the nation that leads the world. I want America to be that nation,” he said.

Mr. Obama also called for extending unemployment insurance, health insurance for the unemployed, and aid to state and local governments.

With the national unemployment rate at 10 percent, a growing chorus of Democratic lawmakers on Capitol Hill have been calling for new legislation targeted at job creation — even on top of the stimulus bill. Mr. Obama’s speech was short on specific details, and senior White House officials made it clear he was leaving implementation of his proposals to Congress.

The officials also stressed that it would be a legal use of TARP funds to encourage small-business lending but acknowledged that funding for Mr. Obama’s other initiatives would need to come from elsewhere.

Mr. Obama’s speech follows a jobs summit Mr. Obama hosted at the White House last week in which he heard from a range of corporate CEOs, economists, union leaders and mayors. He later traveled to Allentown, Pa., on a “Main Street” economic tour.

Stephen Dinan contributed to this report.

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