Obama looks for safety net programs

With unemployment expected to rise well into next year even as the economy slowly recovers, the Obama administration and Democratic leaders in Congress are discussing extending several safety net programs as well as proposing new tax incentives for businesses to renew hiring.

President Obama’s economic team discussed a wide range of ideas at a meeting on Monday, following his Saturday radio address in which he said it would “explore additional options to promote job creation.” But officials emphasized that a decision was still far off and that in any event the effort would not add up to a second economic stimulus package, only an extension of the first.

“We’re thinking through all additional potential strategies for accelerating job creation,” said Mr. Obama’s senior adviser, David Axelrod.

The latest deliberations, and Mr. Obama’s added phrase in Saturday’s radio address, occurred against a backdrop of worsening joblessness. While some economists and policy makers say the recession is easing, a report on Friday showed unemployment in September inched up to 9.8 percent, a 26-year high.

Among the options for additional steps is some variation on Mr. Obama’s proposal during the stimulus debate to give employers a $3,000 tax credit for each new hire, which Congress rejected last winter partly out of concern that businesses would manipulate their payrolls to claim the credit. Another option would allow more businesses to deduct their net operating losses going back five years instead of the usual two; Congress limited the break to small businesses as part of the economic stimulus law.

The search for further remedies is part of a two-track effort in the White House and Congress. Democrats are also considering plans to continue through 2010 the extra unemployment assistance and health benefits available to people who are out of work for long periods. Also likely to be retained, some officials say, is a popular $8,000 tax credit for first-time homebuyers that was included in the $787 billion stimulus law and has helped rouse a housing market that nonetheless remains shaky.

The unemployment and health benefits are otherwise due to expire at the end of this year, and the homebuyer’s credit at the end of November. Extending the unemployment and health benefits alone through next year could cost up to $100 billion. Additional measures would raise the price at a time when the White House and Congress are confronting growing pressure to avoid adding to already high deficits.

Yet Democrats are more anxious about stemming the loss of jobs and creating new ones.

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