Positive Jobs Report Shifts Debate: Jobs vs. Deficit

Wall St Journal:

Friday's promising jobs report, an unexpected piece of good economic news for the Obama administration, could shift dynamics on Capitol Hill after weeks of hand-wringing about what the government can do to boost employment.

Both the White House and congressional leaders had been laying the groundwork for a big job-creation bill. President Barack Obama, after hosting a "jobs summit" Thursday, kicked off a multi-city tour Friday.

But the signs of life in the job market -- arguably the best economic news in a couple of years -- inject a new element to the debate. Congressional Democrats used the report to make the case for continued action. Many remain under acute political pressure to pass a big jobs-related bill, facing tough re-election battles next year with the economy and the still-high unemployment rate a top issue.

The White House, meanwhile, is equally concerned about the deficit, and is disinclined to spend big. Administration officials Friday cited the jobs report as they talked about a more moderate "targeted jobs program."

Democrats hope soon to pass legislation, estimated to cost about $100 billion, extending payments for those whose jobless insurance and related health benefits expire in 2010. That money would likely add to the deficit.

The House and Senate are also crafting jobs packages that will include investing in infrastructure, providing aid to state and city governments, and increasing loan guarantees for small business. Lawmakers are eager to pass the package by early next year, as soon as they complete the health overhaul.

For his part, President Barack Obama intends to announce at a Tuesday speech at Washington's Brookings Institution a list of relatively moderate initiatives he plans to send to Congress. He signaled Thursday he backed expanding a program encouraging homeowners to weatherize.

An administration official said Mr. Obama also favored incentives, possibly tax credits, for small-business hiring, some new infrastructure spending and possibly cash for states and localities. The final list of what the president will support in his Tuesday speech is currently in flux, the official said, and won't be exhaustive.

The new jobs report showed losses slowing sharply in November, with the unemployment rate down from 10.2% to 10%. Nonfarm payrolls fell by 11,000, far less than in recent months.