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Clash Over Economy Sets Tone for 2012 Election

Candidates offer proposals for economic stimulus

"And then unfortunately, Washington got involved in a self-inflicted wound with the debt ceiling fiasco," Obama said during a meeting with his jobs council in Pittsburgh. "And all those things, I think, led to both consumers and businesses taking a big step backwards and saying, we are just not sure where this thing is going."

But Obama has hitched his political fate and the economy's on his jobs plan. It would have extended and expanded payroll tax cuts, provided continued jobless benefits to the long-term unemployed, helped keep teachers and police officers on the job and paid for tens of billions of dollars in public works projects. The legislation would have paid for it all with a surtax on millionaires. Obama has said he will now seek to divvy up the bill and seek passage of its component parts.

The competing, partisan views of such an economic stimulus go to the heart of presidential politics.

Obama says the initial $825 billion stimulus that Obama succeeded in passing through Congress in 2009 halted the recession and put the economy on the path to recovery. He credits the government's intervention in the auto industry for saving General Motors and Chrysler. The president has said his new plan would create as many as 1.9 million jobs and help boost economic growth by as much as 2 percent.

Republicans counter that the 2009 stimulus failed and left the country in its current straits, with snail paced growth and unemployment stuck at 9.1 percent.

The Republican presidential field is offering a list of counterproposals. Texas Gov. Rick Perry is calling for greater domestic oil and gas exploration. Herman Cain wants a massive overhaul of the tax system, with a 9 percent corporate tax rate, a 9 percent individual tax rate and a 9 percent sales tax. Former Sen. Rick Santorum of Pennsylvania is proposing a repeal of every regulation put in place during Obama's presidency that would cost the economy more than $100 million a year.

"Repeal them all," he said.

Obama is already steeling himself.

Members of Obama's own jobs council pressed him on Tuesday to consider the impact of health, environmental and financial rules on jobs. Obama said he was sympathetic to their plea and that his administration is undertaking a review of federal regulations.

But in an argument he will likely make on the campaign trail, he said: "Once we make all the regulations smarter, eliminate the dumb ones and so forth, there's still going to be some tensions that exist around, you know, how much do we value this extra 10,000 jobs versus these extra hundred thousand asthma cases."

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