Obama pushes jobs plan, warns on deficit

Even as he unveiled a $30 billion (18.7 billion pound) scheme to boost small-business lending, Obama acknowledged the need for restraint, warning that record deficits could threaten the economic recovery.

"These deficits won't just burden our kids and our grandkids decades from now," Obama said in the politically competitive state of New Hampshire. "They could damage our markets now, they could drive up our interest rates now, they could jeopardize our recovery right now.

The divergent messages reflected the challenge Obama faces as he promotes the $3.8 billion budget he proposed on Monday combining short-term job-creation plans with long-term austerity measures to head off a potential debt crisis.

Even Obama's fellow Democrats, worried that fears about the economy could threaten their majority in Congress in November's elections, questioned whether his budget would accomplish both goals.

"As the recovery takes hold, we then must pivot and deal with the long-term debt. And the place where I'd fault this budget is I don't see the pivot," said Senate Budget Committee Chairman Kent Conrad, a Democrat.

Obama proposed using money from the unpopular Wall Street bailout program for a small-business lending fund, part of a $100 billion package in the budget proposal aimed at bringing down the 10 percent unemployment rate.

Democrats hope to bring down the unemployment rate before the elections, but some questioned whether a jobs tax credit -- a central element of the administration's jobs package -- would actually induce businesses to step up hiring.

"I think this jobs tax credit talks a little better than it walks," Democratic Representative Lloyd Doggett told Peter Orszag, the White House's budget director.

Despite deficit-reducing gestures like a proposal to impose a three-year spending freeze on domestic programs, Obama is unlikely to get support from Republicans who feel the wind at their backs after a surprise Senate victory in Massachusetts.