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Labor day BBQ? A side dish is partisan sparring on jobs, unemployment

Obama mulls new tax relief and help for 'under water' mortgages to lift economy. Republicans and business groups say if jobs are the goal, tax relief should include highest-earning Americans.

By Staff writer / September 4, 2010

Job seekers check listings on a job board at the Nevada JobConnect Career Center in Las Vegas Wednesday. The unemployment rate rose in nearly half of the nation's 372 largest metro areas in August, as the pace of hiring slowed from earlier this year.

Julie Jacobson/AP


President Obama used his weekly message to the nation as a Labor Day opportunity to pledge that he's working on fresh policies to boost job creation and help "the great middle class."

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His statements came on a weekend of family barbecues and in a season of all-out election combat between his party and Republicans hoping to recapture control of Congress this fall.

And the message came as the US unemployment rate ticked up to 9.6 percent in August. The news on joblessness, released by the Labor Department Friday, included some signs of improvement. The private sector is creating at least a modest number of new jobs (67,000 for the month). And average worker earnings rose a bit, to $22.66 an hour.

But both Mr. Obama and his conservative critics agree the pace of job creation is not as strong as it should be, in order bring unemployment down to more normal levels. And the two sides are both preparing new proposals on jobs and the economy. But that's pretty much where the agreement ends.

Obama plans to unveil some of his ideas this coming week. According to recent news reports, the plans could include a new round of mortgage relief targeted at people whose loan balances exceed their home values. Other proposals could involve tax relief targeted at job creation.

"The steps we have taken to date have stopped the bleeding," Obama said in his address. But he said his administration will do "everything we can to accelerate job creation."

Election season stymies bipartisanship

The election season means it may be particularly difficult for the two sides to agree on legislation. Republicans have enough power in the Senate to potentially block measures pushed by the Democratic majority.

Obama is showing little eagerness to compromise with GOP leaders on the Bush tax cuts that expire at the end of the year. Where Republicans want to extend all the tax cuts, Obama favors a partial extension that allows tax rates on the top brackets to rise back to late-1990s levels.

On Saturday, the Wall Street Journal reported that Obama is considering a bid to use $35 billion -- about the amount of federal revenue saved by allowing taxes to go up for high-income households -- to finance tax cuts for small business and workers.

Economic advisers to the administration argue that spending money on tax cuts for the wealthy is one of the least effective ways of stimulating the economy. Better to get money directly to businesses or to people who are more likely to spend cash, they argue.