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Updated Friday, January 29, 2010 10:07 am TWN, By Chris Cermak, dpa

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Obama's second-year pivot: Laser focus on jobs

Obama's proposals included eliminating capital gains taxes for small businesses and spending US$30 billion to help community banks revive lending to businesses and consumers. The president pledged to double exports in five years, which he said would create 2 million new jobs in the United States.

The U.S. economy likely began a recovery some time in the second half of 2009 after a nearly two-year recession, considered the worst since the Great Depression of the 1930s. The world's largest economy grew at an annual rate of 2.2 percent in the third quarter, yet economists fear the pace of the recovery will not be enough to make a significant dent in unemployment.

This could spell trouble for Obama and his fellow left-leaning Democrats as they head into another election year. More than one third of the 100-seat Senate and all 435 members of the House of Representatives will face voters in November.

Obama hopes the speech will answer critics, including some fellow Democrats, who believe he spent too much time grappling over health care and other domestic priorities in his first year. Critics argue that he shifted away from the economy after pushing an unprecedented US$787 billion public stimulus measure through Congress in February.

Obama used jobs as a prism to view other issues: comprehensive energy legislation that would not just curb global warming but create “green jobs”; health-care reforms would encourage hiring by cutting costs for employers; financial regulatory reforms that would prevent Wall Street banks from sending the wider world into another job- killing recession.

Yet there is a natural tension between many of Obama's job creation plans and another key voter concern: the federal deficit, predicted to hit US$1.35 trillion during the 2010 budget year, which ends in September. Unchecked government spending prompted fiscal conservatives to form a new “tea party” protest movement in 2009.

Virginia Governor Bob McDonnell, in a Republican response to the Wednesday night speech, said Obama was “simply doing too much” and raising the deficit to “unsustainable” levels.

Obama tried to make clear that here, too, he had heard voters' concerns. He proposed a three-year freeze on non-military discretionary federal spending and said he would create a bipartisan commission to make recommendations on how to begin rolling back the massive budget deficit.

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