Obama officials: 9.7% jobless rate 'unacceptable'

NEW YORK (CNNMoney.com) -- Obama administration officials urged lawmakers Tuesday to support the president's budget, saying it will drive job growth.

Treasury Secretary Timothy Geithner, White House Director of the Office of Management and Budget Peter Orszag and Council of Economic Advisers Chairwoman Christina Romer testified before the the House Appropriations committee on the administration's economic outlook and agenda.

In a joint written statement, the officials said that although the stimulus package has helped turn around the economy from when "the threat of a second Great Depression was frighteningly real," the 9.7% unemployment rate is "unacceptable by any metric."

Jobs. An economic forecast produced by the officials' three offices estimates that the labor market will add 100,000 jobs per month in 2010. However, they said the unemployment rate may still rise slightly over the next few months.

The trio added that jobs will grow by 200,000 a month in 2011, bringing the unemployment rate down to 8.9%. In 2012, payrolls will improve by 250,000 jobs each month, pushing the jobless rate down to 7.9% by the fourth quarter.

In the near term, they expect to see job gains by the spring based on consistent increases in temporary employment and employers expanding the workweek. Productivity growth has also surged at the fastest pace in nearly 50 years during the last three quarters, and the officials expect more hiring to keep pace.

GDP and inflation. Geithner, Orszag and Romer said the forecast projects that gross domestic product, the broadest measure of economic activity, will tick higher by 3% in 2010, and grow 4.3% annually in 2011 and 2012.

They expect inflation to remain low, at 1% in 2010, 1.4% in 211 and 1.7% in 2012.

Investments. In addition to highlighting recent proposals from President Obama to spur job growth, the officials sought support for Obama's budget policies that they said would stimulate the labor market and the broader economy.

They pushed for an overhaul of the financial system that would: limit large banks from taking risks that could threaten the whole economy; allow the government to break apart from failing firms; and give consumers better information.

On top of providing $19 billion for job training and other employment initiatives, Geithner, Orszag and Romer said the budget proposes to extend a $2,500 per year tax credit for college costs and assist student loan borrowers with repayment plans.

The budget will also increase research and development by 6.4% and reallocate funding from NASA's Constellation program to research on climate and global change and and science education.

The budget will also extend funding for clean-energy initiatives, infrastructure and to increase exports of goods produced by small businesses.

Deficit. The officials said the budget also proposes to reduce the government's deficit by $1.2 trillion over the next decade through several measures, including requiring Wall Street firms to repay the costs of the bailout programs and allowing some tax cuts aimed at households earning more than $250,0000 annually to expire.

Comprehensive health care reform would also lower the deficit, they said.