Obama proposes tax hikes to pay for jobs bill

The president, seeking to reset his under-pressure presidency and slice away at 9.1 per cent unemployment, sent the bill to lawmakers and warned Republicans not to slow it down with "political games" at a time of great national urgency.

But Obama, by deciding to finance the bill by ending tax breaks for oil and gas firms and individuals earning over $200,000, set up a new showdown with his political foes -- who have already rejected such methods in the past.

The president, who has promised to fight for the bill in every corner of the country, gathered firefighters and teachers who he said would be helped by the bill on Monday in the White House Rose Garden.

"This is a bill that will put people back to work all across the country. This is a bill that will help our economy in a moment of national crisis," Obama said.

"This is a bill that Congress needs to pass. No games. No politics. No delays."

The White House later unveiled Obama's plans for paying for the legislation in a way that will not run up the already bloated deficit.

Budget Director Jack Lew said the plan would remove itemized tax deductions and some exemptions for people earning over $200,000 a year and families which take in $250,000.

Obama would also tax carried interest earned by hedge fund managers as ordinary income rather than as capital gains and take away special preferences enjoyed by oil and gas firms.

He would also close tax loopholes enjoyed by corporate jet owners. In all, the package would raise $467 billion, Lew said.

The congressional supercommittee mandated to find $1.5 trillion in deficit reductions by November could accept Obama's suggestions or recommend a different path to pay for the jobs bill, Lew said.

Republican sources however said that Obama's proposals proved he was still wedded to raising taxes, which they say would slow job creation by small businesses.

"It would be fair to say this tax increase on job creators is the kind of proposal both parties have opposed in the past," said Brendan Buck, a spokesman for House Speaker John Boehner.

"We remain eager to work together on ways to support job growth, but this proposal doesn't appear to have been offered in that bipartisan spirit."

Republicans in the House of Representatives, who have been a roadblock for Obama since their mid-term election triumph last year, however have hinted they will accept some parts of the plan, though not the full bill as sent to them.

Obama, who has record low ratings for his economic management, complained that some Republicans would prefer to make jobs a weapon in the 2012 elections rather than back the "American Jobs Act."

"We have been seeing that too much around here ... That is OK when things are going well ... It is not OK at a time of great urgency and need across the country," Obama said.

The bill halves payroll taxes to 3.1 per cent, provides aid to cash-strapped states and includes a $50 billion dollar infrastructure investment portion to tackle high unemployment and a stagnant economic recovery.

The White House senses that after a bruising showdown over raising US government borrowing authority in July, that Republicans may be feeling political pressure to compromise on some aspects of Obama's plan.

Boehner and Majority leader Eric Cantor have said that they are eager to find some common ground with the president.

But they will be wary of handing Obama a big victory he could trumpet as he prepares to face the voters in November 2012.

In line with his pledge to sell the jobs plan in every corner of America, Obama will tout the legislation on Tuesday in the vital electoral swing on Ohio and then follow up in another key battleground, North Carolina, on Wednesday.

Obama opened his campaign for the bill on Friday in Virginia, a long-time Republican state which he won during his 2008 election victory, and needs again in 2012 as he seeks a new mandate.