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Updated Monday, September 6, 2010 9:46 pm TWN, By Steve Holland, Reuters

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Obama says his economic policies halted 'bleeding'

The New York Times reported late Saturday that Obama will ask Congress to increase and permanently extend a tax credit for business research expenses and pay for the program, which would cost up to US$100 billion over 10 years, by closing other corporate tax breaks.

Citing unnamed administration officials, the newspaper said Obama will outline the proposal in a speech in Cleveland. The White House chose the venue in part to draw a contrast with a recent economic address there by Ohio Representative John Boehner, the House Republican leader.

The research credit, which has existed in some form since 1981, would be expanded under the Obama plan, the Times said. The simpler of two credit options available to business would be increased to 17 percent from 14 percent, it said.

The Wall Street Journal reported on Saturday that the Obama administration was moving toward using revenue that would be generated after the expiration of existing tax cuts for upper-income people to finance about US$35 billion of tax cuts targeted at small businesses and lower-income workers.

A White House spokeswoman, Amy Brundage, declined to comment on the Journal report.

The White House is careful to say these proposals do not add up to a second stimulus package, given voters' anxiety about the country's record budget deficit.

Democrats are to kick off their autumn effort to hang on to Congress on Wednesday when Democratic Party Chairman Tim Kaine delivers a speech in Philadelphia that the party said will frame the choice for voters.

Kaine will “explain the choice the American people have in front of them — a choice between Democrats, who are moving America forward and Republicans, who want to take us back to the failed policies of the past that brought our economy to the brink of collapse,” a party statement said.

Republicans said Democratic policies are responsible for the sagging economy.

“This administration claimed its economic policies would keep unemployment under 8 percent, cut the deficit and turn our economy around. Instead, the unemployment rate is nearing 10 percent, the debt is exploding and we've lost hundreds of thousands of jobs over the summer months,” said Senate Republican leader Mitch McConnell.

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