WASHINGTON – Seeking ways to spur economic growth ahead of the November elections, President Barack Obama will ask Congress to increase and permanently extend research and development tax credits for businesses, a White House official said Sunday.

Obama will outline the $100 billion proposal during a speech on the economy Wednesday in Cleveland, the official said. The announcement is expected to be the first in a series of new measures Obama will propose this fall as the administration looks to jump-start an economy that the president himself has said isn't growing fast enough.

In addition to making the research credits permanent, Obama will also ask Congress to extend one of the credit options available to businesses from 14 to 17 percent, according to the official, who spoke on the condition of anonymity because the proposal has not been formally announced.

Obama has proposed making the research and development tax credit permanent before, as part of the budget he submitted to Congress earlier this year.

"That's where U.S. competitiveness lies in high-technology industries," Laura Tyson, a member of Obama's Economic Recovery Advisory Board, said Sunday on "Face the Nation" on CBS.

"I don't think this is something that has ... as immediate a job impact as, say, movement on the current tax credits for the unemployed or extending a payroll tax holiday of some sort. But I think it's very important in terms of job creation over the longer term," Tyson said.

While the idea is popular in Congress, coming up with offsetting tax increases or spending cuts has been a stumbling block. Obama will ask lawmakers to close corporate tax breaks for multinational corporations and oil and gas companies.

Congress has previously passed research tax credits on a temporary basis. The credits expired last year and a proposal for renewal is pending in the Senate.

While research credits generally have bipartisan support, Washington's contentious political atmosphere means the White House isn't taking anything for granted. Officials have watched other proposals they deem necessary to economic growth, including a bill to extend credit and cut taxes for small businesses, languish on Capitol Hill.

The proposal for research and development tax credits was first reported by The New York Times.

Amid an uptick in the jobless rate to 9.6 percent, the president promised to announce a series of new measures on the economy. The package could include infrastructure bonds for municipalities and extensions for other tax breaks for businesses and individuals that expired at the end of 2009.

The administration is also considering extending a law passed in March that exempts companies that hire unemployed workers from paying Social Security taxes on those workers through December. Sen. Chuck Schumer, D-N.Y., has proposed extending the exemption an additional six months.

Obama is continuing to prod the Senate to pass the small business bill that calls for about $12 billion in tax breaks and a $30 billion fund to help unfreeze lending. Republicans have likened the bill to the unpopular bailout of the financial industry. And the president wants to make permanent the portion of George W. Bush's tax cuts affecting the middle class.

The House has already passed many of the provisions, but they have stalled in the Senate because Republicans and Democrats cannot agree on how to pay for them.

AFL-CIO President Richard Trumka argued for job investment as a way of putting money in the pockets of middle-class Americans and others who need it.

"We do need more credit for small- and mid-sized businesses so that they can start creating jobs," Trumka said Sunday on CNN's "State of the Union." "All of that will help, but it may not be enough. Even the holiday on taxes may not be enough, the research and development tax credit may not be enough. We need to create demand."

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Associated Press writer Stephen Ohlemacher contributed to this report.

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WASHINGTON – Seeking ways to spur economic growth ahead of the November elections, President Barack Obama will ask Congress to increase and permanently extend research and development tax credits for businesses, a White House official said Sunday.

Obama will outline the $100 billion proposal during a speech on the economy Wednesday in Cleveland, the official said. The announcement is expected to be the first in a series of new measures Obama will propose this fall as the administration looks to jump-start an economy that the president himself has said isn't growing fast enough.

In addition to making the research credits permanent, Obama will also ask Congress to extend one of the credit options available to businesses from 14 to 17 percent, according to the official, who spoke on the condition of anonymity because the proposal has not been formally announced.

Obama has proposed making the research and development tax credit permanent before, as part of the budget he submitted to Congress earlier this year.

"That's where U.S. competitiveness lies in high-technology industries," Laura Tyson, a member of Obama's Economic Recovery Advisory Board, said Sunday on "Face the Nation" on CBS.

"I don't think this is something that has ... as immediate a job impact as, say, movement on the current tax credits for the unemployed or extending a payroll tax holiday of some sort. But I think it's very important in terms of job creation over the longer term," Tyson said.

While the idea is popular in Congress, coming up with offsetting tax increases or spending cuts has been a stumbling block. Obama will ask lawmakers to close corporate tax breaks for multinational corporations and oil and gas companies.

Congress has previously passed research tax credits on a temporary basis. The credits expired last year and a proposal for renewal is pending in the Senate.

While research credits generally have bipartisan support, Washington's contentious political atmosphere means the White House isn't taking anything for granted. Officials have watched other proposals they deem necessary to economic growth, including a bill to extend credit and cut taxes for small businesses, languish on Capitol Hill.

The proposal for research and development tax credits was first reported by The New York Times.

Amid an uptick in the jobless rate to 9.6 percent, the president promised to announce a series of new measures on the economy. The package could include infrastructure bonds for municipalities and extensions for other tax breaks for businesses and individuals that expired at the end of 2009.

The administration is also considering extending a law passed in March that exempts companies that hire unemployed workers from paying Social Security taxes on those workers through December. Sen. Chuck Schumer, D-N.Y., has proposed extending the exemption an additional six months.

Obama is continuing to prod the Senate to pass the small business bill that calls for about $12 billion in tax breaks and a $30 billion fund to help unfreeze lending. Republicans have likened the bill to the unpopular bailout of the financial industry. And the president wants to make permanent the portion of George W. Bush's tax cuts affecting the middle class.

The House has already passed many of the provisions, but they have stalled in the Senate because Republicans and Democrats cannot agree on how to pay for them.

AFL-CIO President Richard Trumka argued for job investment as a way of putting money in the pockets of middle-class Americans and others who need it.

"We do need more credit for small- and mid-sized businesses so that they can start creating jobs," Trumka said Sunday on CNN's "State of the Union." "All of that will help, but it may not be enough. Even the holiday on taxes may not be enough, the research and development tax credit may not be enough. We need to create demand."

___

Associated Press writer Stephen Ohlemacher contributed to this report.

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WASHINGTON (AFP) – US lawmakers returning from summer recess face a conundrum on tax cuts set to expire at the end of this year, with the economy seemingly sputtering ahead of looming congressional elections.

A fierce battle over taxes is likely with President Barack Obama's administration pressing for a limited extension of tax breaks for the middle class and Republicans hoping to extend the full range of cuts enacted under former president George W. Bush.

The Bush-era cuts chopped trillions of dollars in taxes over the past decade, but under budget rules they will expire at the end of 2010, resulting in a hike in many kinds of taxes if Congress takes no action.

The Congressional Budget Office estimates extending all the original Bush-era tax cuts would cost 2.56 trillion dollars over the coming decade, which administration officials say would be calamitous for the deficit.

The White House wants to keep the lower income tax rates for all but the top two percent of Americans, to add revenues of some 700 billion dollars over 10 years.

But it remains to be seen whether the two parties will find a compromise and offer a tax break ahead of the November election, or allow rates to rise and blame each other.

President Barack Obama is expected to tout new economic reforms in a heavy slate of events next week, including travel to the hard-hit Midwest and in a major press conference next Friday.

But one top Republican, Arizona Senator John McCain, on Sunday dismissed the effort as too little too late and simply a desperate ploy calculated to soften the impact of the struggling economy on the midterms.

"My reaction is that we always like to see deathbed conversions, but the fact is if we'd had done this kind of thing nearly a couple years ago we'd be in a lot better shape," he told "Fox News Sunday".

"Look, they're just flailing around. Every place I go in my state where people are hurting very badly, one of the major things that small business and large business people tell me is they want some kind of certainty," he said.

"The first thing we need to do is extend the tax cuts that are in existence so people have that certainty," the 2008 Republican candidate told Fox News.

Treasury Secretary Timothy Geithner has said however that a full extension of cuts it would be a "700-billion-dollar fiscal mistake."

"It's not the prescription the economy needs right now, and the country can't afford it," he said in an August speech.

Lawmakers must decide whether to allow the expiration of breaks, effectively raising the top tax brackets, now 33 percent and 35 percent, back to 36 percent and 39.6 percent, which were in effect in the 1990s. Also at stake are reductions in capital gains taxes.

Obama says he wants to "keep on pushing" the economy to keep a fragile recovery on track but also pay more attention to getting debt and deficits under control.

"We're going to be have to do two things at once. We've got to keep on pushing to grow the economy. But we've also on the medium term and the long term have to get control of our deficit," Obama told NBC television.

Many economists say the latest sluggish data highlight the need for some further fiscal relief but views vary widely. US growth slowed to a weak 1.6 percent pace in the second quarter.

"It seems increasingly likely that Congress will extend most, if not all, of the Bush tax cuts for at least a year or two," said Howard Gleckman, research associate at the Tax Policy Center of the Urban Institute and Brookings Institution.

"As the economy shows growing signs of softening, lawmakers are less and less likely to take steps that will be seen as 'raising taxes,'" he added.

Sal Guatieri, senior economist at BMO Capital Markets, said the economic recovery is too fragile to allow taxes to rise, and that failure to extend the relief could undermine already weak consumer confidence.

"Given the fragile state of consumer confidence and how worried all Americans appear to be in their financial security, tax increases at any income level are probably unwelcome," Guatieri said.

Other analysts say that keeping the full rage of tax policies would provide a windfall to the wealthiest Americans with little economic benefit.

"It's hard to think of a less cost-effective way to help the economy than giving money to people who already have plenty, and aren't likely to spend a windfall," said Nobel economics laureate Paul Krugman of Princeton University.

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