Congress returns to fight over jobs, budget cuts

Fights large and small await Congress as it gets back to business, with jobs and budget cuts topping a contentious agenda that also includes a lengthy roster of lower-profile but must-do items that also are potential victims of partisan gridlock.

President Barack Obama is to unveil his jobs agenda in a nationally televised address Thursday night, but early glimpses of the package show it relies heavily on extending expiring programs.

Obama is expected to propose $300 billion in tax cuts and federal spending to get Americans working again. Republicans on Tuesday offered to compromise with him on jobs — but also assailed his plans in advance of his prime-time speech.

According to people familiar with the White House deliberations, two of the biggest measures in the president's proposals for 2012 are expected to be a one-year extension of a payroll tax cut for workers and an extension of expiring jobless benefits. Together those two would total about $170 billion.

The people spoke on the condition of anonymity because the plan was still being finalized and some proposals could still be subject to change.

The White House is also considering a tax credit for businesses that hire the unemployed and spending on public works projects such as school construction.

Obama's speech dovetails with the launch of a bipartisan deficit-reduction panel that will hold its first meeting Thursday amid mixed expectations that it can be successful in a highly partisan climate infused with heavy doses of presidential politics.

In the Senate, the political tit-for-tat started immediately after the opening prayer Tuesday.

Senate Republican leader Mitch McConnell predicted Obama's speech on jobs legislation to a joint session of Congress would include "more of the same failed approach that's only made things worse over the past few years."

He spoke a few moments after the Senate's top Democrat, Harry Reid of Nevada, had said that Republicans, rather than working with Democrats to produce job-creating legislation, insist on "reckless cuts to hurt our economic recovery."

The deficit panel's deadline isn't until late November. But in the short term, there's a need for legislation required to simply keep the government running past Sept. 30. That includes a stopgap bill to avoid a government shutdown and short-term extensions of highway and aviation programs needed to head off widespread layoffs of construction workers whose livelihoods are financed by ticket and gasoline taxes set to expire soon.

A full roster of appropriations bills also looms. The Senate Appropriations Committee is getting to work in earnest Wednesday on three spending bills, including a measure providing $6 billion in much-needed disaster aid — most of which comes on top of tight budget caps imposed just last month.

But time for floor debate could prove to be scarce and all sides already were bracing for the possibility of unpopular "omnibus" legislation wrapping together all the appropriations bills instead of the 12 individual spending bills a more functional Congress might produce.

A shortfall in the Federal Emergency Management Agency's disaster account already has forced a freeze in longer-term rebuilding projects so that remaining money can help victims of recent tragedies such as Hurricane Irene. But the legislation to fund FEMA's budget won't be ready for weeks, which may require a stopgap measure to avoid a cutoff of disaster relief like temporary food and shelter.

The Senate's moves on disaster aid could spark a battle with tea party-backed House Republicans, who say Congress should cut federal spending elsewhere to pay for disaster aid. None of the handful of Republicans present at a Senate Appropriations subcommittee vote Tuesday complained about the move, however.

The House returns Wednesday. On Tuesday, House Speaker John Boehner, R-Ohio, and Majority Leader Eric Cantor, R-Va., offered an olive branch of sorts in a letter to Obama in which they wrote that neither party would win all it wants from the coming debate over jobs legislation.

"We should not approach this as an all-or-nothing situation," they said, striking a conciliatory tone.

They signaled a willingness to consider "initiatives to repair and improve infrastructure" and said the GOP-led House was ready to pass free trade agreements negotiated with Colombia, Panama and South Korea, which they noted the White House estimates would create 250,000 jobs.


Associated Press writer Jim Kuhnhenn contributed to this report.