WASHINGTON — Admitting a bruising debt-limit battle has likely hampered US recovery, President Barack Obama urged polarized lawmakers to help the job-hungry economy put out the "now hiring" sign.
Stung by the bitter feud, Obama is eager to change the subject to economic growth and putting Americans back to work.
"In the coming months," Obama vowed minutes after the Senate approved legislation to avert a disastrous debt default and cut trillions in government spending. "I'll continue also to fight for what the American people care most about: new jobs, higher wages and faster economic growth."
With presidential elections just 15 months away, the US economy's performance and ability to generate new jobs is likely to be felt more directly by Americans than partisan sniping in Washington over the long-term debt.
But the economy is barely treading water more than two years after a devastating recession that put millions of Americans out of work and triggered a global economic crisis.
US lawmakers needed to put the nasty wrangling aside and after their vacation "immediately take some... bipartisan steps that will make a difference," Obama said.
"Both parties share power in Washington and both parties need to take responsibility for improving this economy."
Unemployment has remained historically high above nine percent percent as job creation stalled in June, posing new challenges to the Obama administration's efforts to rev up economic growth.
US consumer spending also fell in June, Commerce Department figures showed in the latest in a series of discouraging reports on the state of the world's largest economy.
Amid the grim news, Obama held a closed-door meeting with leaders of the AFL-CIO, the country's main labor union umbrella organization, and was expected to hear complaints for shrinking from his demand to include tax revenues as part of the debt deal.
Obama signed into law the legislation, which raises the limit on US borrowing and enacts at least $2.1 trillion in spending cuts over the next decade.
But he insisted it was just a "first step" in a lengthy process requiring hyper-partisan Democrats and Republicans to work together on a broad plan to cut the deficit and spur job growth.
"Since you can't close the deficit with just spending cuts, we'll need a balanced approach where everything is on the table," Obama said, calling for adjustments to health care programs and the tax code.
He suggested creating a national infrastructure bank that could leverage private capital toward public investment, saying "we have workers who need jobs and a country that needs rebuilding."
As he pivoted toward a jobs agenda once more, Obama took a swipe at lawmakers who led the US economy to the brink by threatening a disastrous default.
"It's pretty likely that the uncertainty surrounding the raising of the debt ceiling for both businesses and consumers has been unsettling and just one more impediment to the full recovery that we need," Obama said.
White House spokesman Jay Carney recognized Americans had "lost a little bit of faith " in the prolonged stalemate.
Obama and congressional leaders quickly turned to the next front in the war over the budget: a new legislative committee that will be tasked with developing a broader plan to control the government's debt.
The bipartisan panel, to be named this month, is likely to confront the same ideological divide that caused an almost crippling impasse in the debt-limit debate. Republican leaders warn they will not include anyone on the panel who is willing to raise taxes, prompting Democrats to threaten a hard line against cuts to Social Security and Medicare benefits.
Speaking in the White House Rose Garden after the Senate vote, Obama called the initial round of spending cuts in the package "an important first step" in forcing the government to live within its means.
"This compromise requires that both parties work together on a larger plan to cut the deficit," he added. "And since you can't close the deficit with just spending cuts, we'll need a balanced approach where everything is on the table."
Obama stressed that the debt-reduction package avoids "cutting too abruptly while the economy is still fragile." And he vowed to pivot rapidly to deal with a jobless rate stuck stubbornly above 9 percent.
He urged Congress to take "bipartisan, common-sense steps" after its August recess to boost job creation and spur economic growth, including permanently extending the George W. Bush-era tax cuts for middle-class families, which are to expire next year. He called for patent overhaul, the passage of trade deals with Asian and Latin American countries, and an "infrastructure bank" to fund federal projects and put construction workers back on the job.
Although Obama has urged that the new legislative panel study the range of options for shrinking the national debt, it's far from clear that everything will be on the table when the panel, composed of six lawmakers from each party, begins looking for more savings.
In an interview, Senate Majority Leader Harry Reid, D-Nev., said he would like to "put people on it who are willing to do entitlement cuts ... people with open minds." But, he said, the GOP's uncompromising stand against tax increases "makes it pretty hard for me."
House Budget Committee Chairman Paul Ryan, R-Wis., argued that Democrats "have already got their tax increases," including fresh revenue buried in last year's health-care overhaul. Ryan said he assumes Obama and congressional Democrats will make good on their pledge to let the tax cuts that benefit high-income households expire on schedule.
"So their tax increases are coming," he said. He said the new committee "could do a loophole closer here or there. But there's no way you're going to have significant revenues in the picture. You're not going to get tax reform out of this thing."
Independent budget analysts held out hope that the committee will revive ambitious debt-reduction goals that would require both political parties to make sacrifices.
"That is the key for people to understand: This is just phase one. This doesn't get us to the promised land," said Erskine Bowles, who was Bill Clinton's White House chief of staff and who served as co-chairman of a commission Obama set up last year to recommend ways to control federal borrowing. "This doesn't stabilize the debt or reform the tax code or slow the rate of growth of health care. There's lots of work left to do."
The debt-limit agreement directs the new committee to identify at least $1.2 trillion in additional savings over the next decade. If the panel does not produce a plan by the end of November — or if Congress does not adopt it by the end of the year — more than $100 billion a year would be cut automatically from the budget, starting in January 2013.
Those reductions would be split evenly between defense and nondefense programs, although many Democratic priorities, such as Medicare and Social Security, would be exempted. The Pentagon, meanwhile, would take a $54 billion hit in the first year alone.
Democrats said the threat of such large automatic defense cuts would give them powerful leverage to renew their demand that Republicans consider tax increases for corporations and the wealthy as part of the solution to the nation's budget problems.
"Republicans are going to have to decide whether it's more important to protect special-interest tax breaks or whether it's more important to protect the national security of the United States," said Rep. Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee. "That's the choice they're going to have to make."
In an interview, Senate Minority Leader Mitch McConnell, R-Ky., agreed that the trigger is "really catastrophic," and that the consequences of not coming up with a bipartisan debt-reduction plan would be "unacceptable." Referring to the new committee, McConnell said, "We all view this as a real deal."
But Sen. Jon Kyl of Arizona, the No. 2 Republican in the Senate and widely viewed as one of McConnell's likely picks for the panel called the fate of the tax issue uncertain.
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