(Reuters) – The United States has a jobs problem and there’s not a lot President Barack Obama or Federal Reserve Chairman Ben Bernanke can do about it.
In the face of rising risks of a recession that could imperil his re-election chances next year, Democrat Obama wants Congress to extend a payroll tax cut and emergency unemployment benefits that are due to expire in December.
But the Republican-controlled House of Representatives is emboldened by budget concessions it made Obama swallow to lift the country’s debt limit this week and he has little political leverage to win significant fresh spending to aid growth.
“Obama does not have much presidential persuasion left. He is running out of capital,” said James Thurber, of American University’s Center for Congressional and Presidential Studies.
Obama’s political opponents have been openly scornful of the impact of two previous stimulus packages, which were accompanied by extraordinary measures by the Federal Reserve to kick-start the U.S. economy.
“It seems we’ve thrown everything at it. We’ve had QE1 and QE2, Stimulus 1 and Stimulus 2, and the unemployment rate is still 9.2 percent,” said John Makin, an economist at the American Enterprise Institute in Washington. “Maybe there are just not many options here at this point,” he said.
World stock markets shuddered after disappointing U.S. growth and manufacturing numbers and investors rushed to buy long-dated U.S. Treasury bonds in a move that suggests deep concerns about the economic outlook.
Data on Friday is expected to confirm the U.S. unemployment rate remained stuck at 9.2 percent in July.
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