By Lori Montgomery and Brady Dennis
Wednesday, August 4, 2010; A01

President Obama and congressional Democrats -- out of options for another quick shot of stimulus spending to revive the sluggish economy -- are shifting toward a longer-term strategy that promises to tackle persistently high unemployment by engineering a renaissance in American manufacturing.

That approach, heralded by Obama last week in Detroit and sketched out in a memo to House Democrats as they headed home for the August break, is still evolving and so far focuses primarily on raising taxes on multinational corporations that Democrats accuse of shipping jobs overseas.

The strategy also repackages policies long pursued by the White House -- such as investing in clean energy, roads, bridges and broadband service -- with more than two dozen legislative proposals aimed at developing a plan for promoting domestic manufacturing.

"We know manufacturing produces good jobs, high-paying jobs," House Majority Leader Steny H. Hoyer (D-Md.) said this week as Democrats released a report showcasing small gains in manufacturing since Obama took office. "We have committed ourselves to a long-term agenda aimed at enhancing the manufacturing capabilities in America."

Republicans mock the endeavor, dubbed "Make It in America," as blatantly political, designed primarily to save the jobs of endangered Rust Belt Democrats whose races could determine the balance of power in the November congressional elections. Senior Democrats acknowledge that the strategy emerged after the issue of off-shoring jobs figured prominently in a Pennsylvania special election earlier this year and a recent poll.

Some independent analysts are also skeptical. U.S. manufacturing jobs have been disappearing since 1979, in part because of the heightened productivity of American workers but also because of cheaper labor abroad. During the past decade, the sector lost a third of its workers, falling to 11.7 million last year from 17.3 million people in 1999, according to the most recent figures from the Bureau of Labor Statistics.

Many of the ideas being promoted by Democrats to stop the slide are hardly new. House Republican Whip Eric Cantor (Va.) called the strategy "more meaningless than harmful" after voting for one Democratic proposal, a resolution to encourage packers of domestic fruits and vegetables to display the American flag on their labels. Another measure, which last week won final congressional approval and is awaiting Obama's signature, would extend an array of existing tariff adjustments that benefit U.S. manufacturers. Previously known as the "Miscellaneous Tariff Bill," Democrats rechristened it the "U.S. Manufacturing Enhancement Act of 2010."

With unemployment stuck at 9.5 percent, polls show the economy is the top issue among voters. Bold initiatives to prop up the financial industry and stimulate demand were successful in preventing total collapse, according to many economists, but those efforts couldn't eliminate the effects of the worst recession since the Great Depression. The initiatives added to a mounting national debt, however. Republicans say the money was wasted, leaving Democrats reluctant to do more.

The House left town Friday -- and the Senate will do so this week -- without fulfilling Obama's request for a big boost in stimulus spending. Congress managed to revive long-term unemployment benefits, but the Senate has so far rejected a plan to prevent state layoffs and is struggling to approve a package of small-business hiring incentives.

Asked Friday whether Obama will press for more stimulus spending, White House press secretary Robert Gibbs said no. "If you look at the politics of what's going on Capitol Hill right now," he said, "I think we got everything we could."

"Make It in America" offers Democrats a path forward. "It's a way to be prospective instead of retrospective," Democratic strategist Paul Begala said last week, after attending a luncheon for Senate Democrats focused on political messaging. "Every election is about the future, not the past."

Republicans are pressing their own agenda focused on lower taxes, less regulation and an end to Obama's most ambitious initiatives, such as his overhaul of the health-care system and his plan to tax carbon emissions, a proposal that is particularly worrisome to energy-intensive industries. Democrats say Republicans are promoting the same agenda that encouraged excessive risk-taking on Wall Street and set the stage for a near-meltdown in the global economy under President George W. Bush. Republicans counter that it would give businesses the certainty they need to hire workers.

"We are at a clear crossroads," Cantor said. "Right now, what you've got is a hostile environment for job creators. We're saying let's stop the harm from being imposed."

The seeds of the "Make It in America" campaign were planted earlier this year, when Rep. Mark Critz (D-Pa.) won an unexpectedly large special-election victory by campaigning against tax breaks for companies that move jobs offshore. Then in late June, House Democrats were briefed on a poll conducted this spring for the Alliance for American Manufacturing, which found that voters are anxious about the nation's mounting debt to China. Key voting blocs -- including independents and older people with no college education -- named the loss of manufacturing jobs as a top worry, the survey found.

The poll "crystallized" Democratic thinking, said Rep. Chris Van Hollen (D-Md.), who leads the political committee in charge of electing Democrats to Congress. The poll's findings also helped to rebrand policies the administration was already pursuing, such as a federal restructuring of the auto industry. Last week in Detroit, Obama credited that effort with the industry's strongest job growth in more than a decade. Overall, manufacturing has added 136,000 jobs in the first six months of this year, according to a report released Monday by the congressional Joint Economic Committee -- the longest stretch of growth in that sector since 1997.

"We have a vision of how to build a stronger economy," and "Make It in America" is "an essential element," White House senior adviser David Axelrod said. Without federal support for innovations in battery technology for electric vehicles, for example, "those jobs would be to going to China, they'd be going to India. They would not be going to American workers."

The strategy has won high marks from United Steelworkers President Leo Gerard. The Republican-leaning National Association of Manufacturers has been less enthusiastic, though Hoyer said he was working with NAM and the U.S. Chamber of Commerce to incorporate their ideas.

Coming this fall: House hearings on Chinese currency manipulation, which NAM views as a critical barrier to U.S. exports. But Democrats are still divided on another NAM priority: free-trade agreements with South Korea, Colombia and Panama that have been stalled for years in Congress by opposition from organized labor.

Scott Paul, executive director of the Alliance for American Manufacturing, which represents both labor and manufacturers, is cautiously optimistic. Paul said House Speaker Nancy Pelosi (D-Calif.) has assured industry officials that manufacturing will remain a priority even after the November elections.

"When you look back on the last decade, it was the worst decade for American manufacturing ever, including the Great Depression," Paul said. "I think what the [Democratic] leadership is doing is actually a genuine response to voters."