Labor day BBQ? A side dish is partisan sparring on jobs, unemployment

President Obama used his weekly message to the nation as a Labor Day opportunity to pledge that he's working on fresh policies to boost job creation and help "the great middle class."

His statements came on a weekend of family barbecues and in a season of all-out election combat between his party and Republicans hoping to recapture control of Congress this fall.

And the message came as the US unemployment rate ticked up to 9.6 percent in August. The news on joblessness, released by the Labor Department Friday, included some signs of improvement. The private sector is creating at least a modest number of new jobs (67,000 for the month). And average worker earnings rose a bit, to $22.66 an hour.

But both Mr. Obama and his conservative critics agree the pace of job creation is not as strong as it should be, in order bring unemployment down to more normal levels. And the two sides are both preparing new proposals on jobs and the economy. But that's pretty much where the agreement ends.

Obama plans to unveil some of his ideas this coming week. According to recent news reports, the plans could include a new round of mortgage relief targeted at people whose loan balances exceed their home values. Other proposals could involve tax relief targeted at job creation.

"The steps we have taken to date have stopped the bleeding," Obama said in his address. But he said his administration will do "everything we can to accelerate job creation."

Election season stymies bipartisanship

The election season means it may be particularly difficult for the two sides to agree on legislation. Republicans have enough power in the Senate to potentially block measures pushed by the Democratic majority.

Obama is showing little eagerness to compromise with GOP leaders on the Bush tax cuts that expire at the end of the year. Where Republicans want to extend all the tax cuts, Obama favors a partial extension that allows tax rates on the top brackets to rise back to late-1990s levels.

On Saturday, the Wall Street Journal reported that Obama is considering a bid to use $35 billion -- about the amount of federal revenue saved by allowing taxes to go up for high-income households -- to finance tax cuts for small business and workers.

Economic advisers to the administration argue that spending money on tax cuts for the wealthy is one of the least effective ways of stimulating the economy. Better to get money directly to businesses or to people who are more likely to spend cash, they argue.

Republicans counter that spending and investment by the rich is every bit as vital to economic recovery as is spending by other groups. Even some Democrats in Congress agree with that thesis -- at least in the short run. The idea is that tax hikes on top earners shouldn't kick in while the economy is still in such fragile shape, and while uncertainty about tax policy is one of the factors weighing on business.

"We need a Congress and a White House that will listen to the American people ... and help end the uncertainty for small businesses," House Republican leader John Boehner of Ohio said recently. He noted that many small businesses are effectively reporting their income under the personal income tax.

New round of mortgage relief?

The Wall Street Journal also said Obama is planning a new round of mortgage relief for so-called "under water" borrowers. The idea, according to the report, is for the Federal Housing Administration to refinance borrowers if their current lenders agree to write down mortgage balances to less than the value of the property. The goal would be to help perhaps 1 million households avoid a mortgage default, and have more disposable income to spend in the economy.

Many housing experts say that's a laudable goal, but it's also an objective that the Obama administration has already found hard to achieve in other programs to date.

In a briefing for reporters Friday, Alan Krueger, the Treasury department's assistant secretary for economic policy, said the economic recovery has been slow in part because of the excessive buildup of private sector debt (such as mortgages) before the financial crisis. The Obama team is weighing a wide range of policy options to boost the economy, he said.

Any new programs appear likely to be limited in cost, because voters are worried about high federal deficits as well as jobs.

"Growth has slowed to anemic levels. Our national debt is growing by more than four billion dollars per day," Rep. Geoff Davis (R) of Kentucky said in the Republican weekly radio address Saturday. "So as it turns out, ‘Recovery Summer’ was nothing more than a meaningless slogan."

Republicans say they are close to unveiling their own new plans to revive growth.