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Saturday August 29th, 2015 12:56PM

Obama: Congress, Europe must stem economic crisis

By The Associated Press
WASHINGTON - The economy at risk, President Barack Obama accused Republicans on Friday of pursuing policies that would weaken the U.S. recovery. He simultaneously urged Europe's leaders to prevent an overseas debt crisis from dragging down the rest of the world.

At a White House news conference five months before Election Day, the president also said Republican allegations that his administration has leaked classified information for political gain were offensive. He said his administration has "zero tolerance" for any such practice.

As for the economy, Obama urged passage of legislation that he said would create jobs - proposals that Republicans have long blocked.

"The recipes that they're promoting are basically the kinds of policies that would add weakness to the economy, would result in further layoffs, would not provide relief to the housing market and would result ... in lower growth," said the president, who is locked in a close campaign for re-election.

Republicans shot back quickly.

"It's baffling that in the face of all evidence to the contrary, this president still believes that spending money we don't have to inflate the government is the answer to America's economic problems," Senate Republican Leader Mitch McConnell of Kentucky said in a written statement. He said the economy "would respond much more favorably" if Obama would agree to extend all tax cuts that are due to expire at year's end.

Obama's tone was markedly different when it came to European leaders, whom he prodded to inject money into the banking system. He also said it is in "everybody's interest for Greece to remain in the eurozone," despite the division of public opinion inside the country where austerity measures have been imposed to deal with out-of-control deficits.

"The Greek people also need to recognize that their hardships will likely be worse if they choose to exit from the eurozone," Obama said.

"The solutions to these problems are hard, but there are solutions," he said.

The president spoke after several days of difficult turns for his re-election prospects, including last Friday's report that the unemployment rate had risen slightly to 8.2 percent in May as job creation had slowed, and new signs that the European debt crisis was hurting the U.S. economy.

In the overtly political realm, Wisconsin's Republican Gov. Scott Walker turned back a recall movement led by organized labor, while former President Bill Clinton stirred controversy by saying Obama should be ready to sign a short-term extension of all expiring tax cuts - including those that apply to the wealthiest taxpayers that the president has vowed not to renew.

The president's attack on Republicans was part of his campaign playbook in an election in which the economy is the top issue. Republican rival Mitt Romney is campaigning for the White House as better equipped to created jobs, and polls make the race a close one, with only about a dozen battleground states in dispute.

Said McConnell: "The economy would respond much more favorably to providing the tax certainty Americans deserve by extending all the tax rates and assuring employers they do not have to budget for the largest tax increase in American history next year."

Obama's opening remarks were part jawboning and part economics lesson.

He stressed the importance of a strong European economy, saying, "If there's less demand for our products in places like Paris or Madrid it could mean less business for manufacturers in places like Pittsburgh or Milwaukee."

The president said that if Congress had passed his jobs bill from last fall, "we'd be on track to have a million more Americans working this year, the unemployment rate would be lower, our economy would be stronger."

"Of course Congress refused to pass this jobs plan in full," he said dismissively. "They left most of the jobs plan just sitting there, and in light of the headwinds we are facing right now I urge them to reconsider because there are steps we can take right now."

Congress approved an extension of the payroll tax, which Obama said was helping the economy, but Republicans balked at calls for additional spending to provide funding for teachers, school construction, highways and more, citing concerns about the deficit.

The president said U.S. companies actually have been creating jobs at a faster clip than they did after the previous recession while state and local governments have been shedding them.

"Where we're seeing weaknesses in our economy is in the state and local governments, often times cuts initiated by governors or mayor who are not getting the kind of help they got in the past from the federal government," he said.

"If Republicans want to be helpful, if they really want to move forward and put people back to work," they should enact legislation to permit the hiring of more teachers and law enforcement personnel, he said.

As for leaks of classified information, Obama said his administration has "zero tolerance" for it. Lawmakers are investigating recent leaks of sensitive information about the covert drone and cyberwars against terrorism. Republican Sen. John McCain has accused the Obama White House of leaking the information to bolster the president's standing on national security grounds.
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