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Published: Friday, 9/10/2010

Obama says Republicans holding country's economic recovery hostage

REUTERS

WASHINGTON — President Barack Obama accused Republicans on Friday of holding the middle class hostage as he pushed new ideas to stimulate the sluggish U.S. economy and try to reverse Democrats' grim election prospects.

With opinion polls showing more Americans questioning his economic leadership, the president used a rare news conference at the White House to hammer home a message that painted Republicans as obstructionist and the party for the rich.

Heating up the rhetoric with less than two months until congressional elections Nov. 2, Obama zeroed in on the Republican call for the government to extend Bush-era tax cuts for both the middle class and wealthier Americans.

Obama said he was willing to sign a bill this month to extend tax relief for the middle class but repeated that the country could not afford to keep tax rates low for the wealthy, which would cost an estimated $700 billion over 10 years.

He said Republicans were punishing the middle class and delaying the U.S. economic recovery to deliver tax breaks to millionaires and billionaires.

“Why hold the middle class hostage in order to do something that most economists don't think make sense?” Obama said.

The Republican leader in the House, John Boehner, swiftly dismissed Obama's criticism.

“Half-hearted proposals and full-throated political attacks won't end the uncertainty that is keeping small businesses from creating jobs,” Boehner said in a statement as Obama spoke.

The news conference, which also touched on Middle East peace and the war in Afghanistan, capped a week in which Obama rolled out modest tax cuts and spending proposals aimed at jump-starting job growth.

Stubbornly high unemployment threatens to cost Democrats control of the House, and possibly the Senate, in the looming elections.

Economists say there is little Obama can do to boost the economy before November. His main tool between now and then will be the pulpit to highlight policy differences with Republicans and convince voters that no matter how slow the economic recovery, Democrats still have the better plan.

Obama said Republican policies under his predecessor President George W. Bush had led to “a financial crisis and a terrible recession that we're still digging out of today.”

But he acknowledged that Americans are unhappy with the pace of the recovery under his leadership.

“If it was just a referendum on whether we've made the kind of progress that we need to, then people around the country would say 'We're not there yet,'” Obama said.

“If the election is about the policies that are going to move us forward, versus the policies that will get us back into a mess, then I think Democrats will do very well.”

Voter unease over unemployment of nearly 10 percent, anger at federal bailouts and anxiety over a record budget deficit risk heavy losses for Democrats in November, when all 435 seats in the House and 37 of 100 Senate seats are up for grabs.

A Washington Post/ABC News poll Tuesday found 53 percent of respondents planned to cast their ballot for Republicans, versus 40 percent for Democrats.

U.S. financial markets showed little initial reaction to Obama's remarks, with stocks maintaining modest earlier gains.

The stock market's mood has improved in recent days, especially after better jobs data Thursday that showed new claims for unemployment benefits falling to a two-month low in the latest week.

Obama again called on Republicans in the Senate to stop blocking a $30 billion small business jobs bill. Republicans have been upset that Democrats shut them out from amending the package, which aims to help community banks boost lending to small businesses.

Obama formally announced long-time economic adviser Austan Goolsbee as the new head of the White House Council of Economic Advisers, a key source of policy advice for the president.

Already a familiar face on financial news television, Goolsbee is an effective communicator and will likely be a persuasive advocate for Obama's approach to the economy as voters weigh the choice between Democrats and Republicans in November.



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