Obama faces tight restraints in crafting jobs plan

August 30, 2011 - 3:15 AM
Obama Economc Adviser

President Barack Obama announces his selection of Alan Krueger as chairman of the Council of Economic Advisers, Monday, Aug. 29, 2011, in the Rose Garden of the White House in Washington. (AP Photo/Carolyn Kaster)

WASHINGTON (AP) — President Barack Obama is preparing a September jobs package but is hamstrung by budget cuts and a tight debt ceiling that leave him with limited tools to prime the economy and crank up employment.

At a minimum, the president's plan will call on Congress to extend current payroll tax cuts and jobless benefits, spend money for new construction projects and offer incentives to businesses to hire more workers. Economists say that would maintain the status quo, but not propel the economy to new heights.

Obama faces a divided Congress where Republicans are demanding austerity, not more spending.

The president will unveil his plan in a speech next week. It will help drive an economic debate this fall and set the tone for next year's presidential election campaign.