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Obama open to 'incremental steps' on job growth

President Obama discusses jobs on Tuesday with House Minority Leader John Boehner, left, and House Speaker Nancy Pelosi.
President Obama discusses jobs on Tuesday with House Minority Leader John Boehner, left, and House Speaker Nancy Pelosi.
  • President Obama meets with congressional leaders to discuss job growth measures
  • "It's realistic for us to get a package moving quickly," Obama says afterward
  • Top Republicans cautiously optimistic an agreement on "small package" possible
  • Sharp debates have contributed to what observers call toxic political climate on Capitol Hill

Washington (CNN) -- President Obama and top congressional leaders from both parties expressed cautious optimism Tuesday that they can reach agreement on a new jobs bill.

The positive assessment came after Obama spent much of the morning huddling with a bipartisan Capitol Hill delegation to discuss ways to help lower the country's 9.7 percent unemployment rate.

The president, in a surprise appearance before reporters, said he is confident "we should be able to come together" on a job-creation measure.

Senate Majority Leader Harry Reid, D-Nevada, indicated negotiators are close to a bipartisan agreement. He said the Senate could work through the weekend to pass it.

Senate Minority Leader Mitch McConnell, R-Kentucky, told reporters it was possible "the Senate could get there with a small package." He also said on the Senate floor, however, that Republican senators might need more time to study any agreement before voting on it.

"My members need to be able to feel like they understand what they are being called upon to support," he said.

GOP sources said differences remain over the bill. They expressed concern Democrats are trying to jam it through before it's ready in order to gain political momentum ahead of an upcoming weeklong Presidents Day recess.

Video: Obama looks to boost jobs
Video: GOP's budget concerns

Obama said he "won't hesitate to embrace a good idea from my friends in the minority party." But, he cautioned, "I also won't hesitate to condemn what I consider to be obstinacy that's rooted not in substantive disagreements but in political expedience."

Bipartisanship, he warned, "can't be that I agree to all of the things that [Republican leaders] believe in or want, and they agree to none of the things I believe in or want."

The measure being worked on in the Senate has a price of about $85 billion, according to aides. It combines tax breaks for businesses that hire new workers with spending on infrastructure and an extension of unemployment benefits.

The package also incorporates several items not directly related to the creation of jobs, Senate sources said. For instance, it includes a one-year extension of the Patriot Act, $1.5 billion in disaster relief for farmers, extension of the flood insurance program, an increase in Medicare payments for doctors and the extension of several expiring tax credits.

The question of how to balance immediate economic concerns with growing fears of skyrocketing budget deficits is one of several contentious issues dividing Obama and the GOP leadership. Sharp debates over economic management, health care reform and other topics have contributed to what many observers characterize as a toxic political climate on Capitol Hill.

In his recent State of the Union address, Obama called for monthly meetings with both Democratic and GOP leaders as a way to help break the partisan logjam. Tuesday's meeting included House Speaker Nancy Pelosi, House Minority Leader John Boehner, Reid and McConnell, among others.

The same group is tentatively slated to meet February 25 to discuss health care reform.

"Part of what we'd like to see is the ability of Congress to move forward in a more bipartisan fashion on some of the key challenges that the country is facing right now," Obama said at the start of Tuesday's meeting. "I think it's fair to say that the American people are frustrated with the lack of progress on some key issues."

The president said that while "the parties are not going to agree on every single item, there should be some areas where we can agree and we can get some things done." He also backed the idea of having more "vigorous debates" on subjects where a bipartisan agreement cannot be reached.

Referring to the jobs bill, McConnell stressed traditional GOP priorities such as nuclear power, off-shore oil drilling and clean coal technology. He also urged passage of stalled trade agreements with Colombia, Panama and South Korea.

Such measures, he argued, would be "jobs generators."

"Of course" McConnell likes those ideas, Obama later said. They are "part of the Republican agenda for energy, which I accept."

The president said he's "willing to move off some of the preferences of my party in order to meet them halfway, but there's got to be some give from their side as well."

Emphasizing deficit-related concerns, Obama noted he will be moving forward with an executive order creating a commission to examine long-term deficit reduction options. Last week, the Senate voted down a bill to establish such a panel when seven Republican co-sponsors eventually opposed the measure, an event Obama cited as an example of political obstinacy.

Boehner, in turn, said he urged the president to push for immediate spending cuts, as opposed to deciding to "punt all of this off to some spending commission."

Calls for bipartisanship have grown in the wake of GOP Sen. Scott Brown's upset win in the recent Massachusetts special election. Brown's victory stripped Democrats of their 60-seat Senate supermajority and gave Republicans enough votes to block most legislation.

Since Brown's election, Democrats have moved away from introducing a more comprehensive jobs bill similar to the $154 billion measure passed by the House in December. Even if the Senate passes a bill this week, the measure would still have to be reconciled with the House bill.

The first job creation bill of the new year, promoted by Sens. Charles Schumer, D-New York, and Orrin Hatch, R-Utah, aids any private sector employer who hires a worker who's been unemployed for at least 60 days. That employer is absolved of paying the 6.2 percent share of the employee's Social Security payroll tax for the rest of 2010.

Also, employers who keep these workers on the payroll continuously for a year would be eligible for a $1,000 tax credit on their 2011 tax returns.

House Majority Leader Steny Hoyer, D-Maryland, said Tuesday he supports the Schumer-Hatch proposal.

"If you're going to do a jobs tax credit ... you [should] key it to payroll so that payroll expands and you get credit obviously on expansion, not simply on changing new for old," he said. "If we're going to do it, that's the way to go."

Hoyer also said that "there was general agreement that getting lending moving to small business was absolutely essential if we're going to allow them to grow and grow jobs."

Sharp disagreements, remain, however, over how to fund such a proposal. Several Republican senators have come out against using Troubled Asset Relief Program bank bailout funds to jump-start lending to small businesses, and against raising taxes on the wealthy.

Obama has promoted the idea of boosting small business lending by giving $30 billion in TARP funds to banks and providing these firms with a $5,000 tax credit for each addition to their payrolls.

Norman Ornstein, a political observer at the conservative-leaning American Enterprise Institute, recently argued that out of all legislation before Congress, a jobs bill is most likely to bring Republicans and Democrats together.

"Not because Republicans are eager to give Obama and the Democrats the victory [and] not because they have a fundamental agreement with a lot of things they want to do," he said. But politically, "to say you're going to oppose even a government program on jobs is a harder thing to do than say you're going to oppose a government takeover of the health care system."

CNN's Ted Barrett, Dana Bash, Ed Hornick, Tami Luhby, Alan Silverleib, Paul Steinhauser, and Deirdre Walsh contributed to this report.