With a heavy dose of blame for Republican tax cuts and spending, President Obama said he planned to cut the deficit and fund a jobs program with offsets from $200 billion savings in a federal bank bailout fund.
“These budget-busting tax cuts and spending programs were approved by many of the same people who are now waxing political about fiscal responsibility while opposing our efforts to reduce deficits by getting health care costs under control,” Obama said. “It’s a sight to see.”
Continuing his focus on the nation’s top economic woe, the president cited “the bitterness of partisanship” and the political score-settling system for exacerbating the crisis.
“We’ve seen the consequences of this failure of responsibility,” Obama said in a speech at the Brookings Institution. “The American people have paid a heavy price.”
Obama, as a member of the Democratic-controlled Congress before he was elected president, supported the $700 billion financial services bailout and later expanded it to cover automakers.
The White House now claims the Troubled Asset Relief Program will end up costing about $200 billion less than expected.
Though the government is strictly limited in what it can do with the money, using some to pay down the deficit frees up some other money for Congress to put toward job creation, according to the administration.
Even so, the TARP program is expected to add about $141 billion to the federal deficit, which is expected to reach an all-time high of $1.5 trillion this year.
“It was the intent of the law when it passed that any funds that were paid back in should go back in the Treasury — should be used to pay down the debt,” said Sen. John Thune, R-S.D. “They shouldn’t be recycled, respent, reused, allowing TARP to become what is essentially a political slush fund to be used for whatever the administration decides to use it for.”
The president said the government has been forced to “spend our way out of this recession.”
Obama is asking lawmakers for new tax incentives for small business and a one-year suspension of the capital gains tax on small-business investment, plus an extension of unemployment benefits. He also is calling for an incentive program for homeowners who weatherize their houses and increased federal spending on infrastructure such as highway construction. He has not announced the price tag for his new proposals.
The president blamed GOP policies for forcing creation of the TARP fund last year.
“We were forced to take those steps largely without the help of an opposition party which, unfortunately, after having presided over the decision making that led to the crisis, decided to hand it over to others to solve,” Obama said.
The president’s latest proposals come less than a year after Congress approved a $787 billion stimulus that has largely failed to deliver on promised job creation.
A new CNN/Opinion Research Corp. poll found just 34 percent of respondents said the economy was doing well — down three points from last month.
