Editore"s Note
Tilting at Windmills

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December 3, 2009

JOB ONE.... The White House jobs summit kicks off today, though expectations for major breakthroughs are fairly low. The event will reportedly bring "130 corporate executives, economists, small-business owners and union leaders to the White House to sound out ideas for accelerating job growth during the worst labor market in a generation." It can't hurt to kick some ideas around, but it's hard to imagine meaningful new policy proposals emerging from the forum.

The Washington Post report on the summit, however, noted that Obama administration officials are "unwilling to make any investments that would add significantly to the nation's ballooning deficit." Labor leaders have put forward ideas -- aid to cash-strapped states, more funding for infrastructure projects -- but "taken together, those initiatives could cost hundreds of billions of dollars -- a tab Obama seems unwilling to shoulder."

It reminded me of something Dean Baker said via email this week. (I'm republishing his note with his permission.)

Remember the Bush vs. Clinton debates in 1992? The highlight of the townhall debate was when a young woman asked President Bush how the debt affected him personally. He gave the normal answer about how he worries about his grandchildren blah, blah, blah.

The woman looked at Bush like he was from Mars. Then Clinton stepped up and asked the woman whether she knew people who lost their jobs. She said yes. Then Clinton went on to say that as governor of a small state, when there were layoffs, he almost certainly knew some of the people affected.

This was the sort of answer the woman was looking for. She had asked a question about the debt, but she was really asking about the economy. I think that discussions of the debt are often a placeholder for concerns about the economy.

I looked up the transcript of that '92 debate, and Dean's description is spot-on. The specific question was, "How has the national debt personally affected each of your lives. And if it hasn't, how can you honestly find a cure for the economic problems of the common people if you have no experience in what's ailing them?"

Bush started talking about interest rates, and then transitioned to talking about his grandchildren. He eventually said, "I'm not sure I get it. Help me with the question and I'll try to answer it."

The moderator intervened: "I think she means more the recession, the economic problems today the country faces rather than the deficit."

The clarification mattered -- because the question didn't really make sense. The voter wanted to know if the candidates could relate to families suffering through tough times, but she asked how "the national debt personally affected" their lives.

Eighteen years later, the White House wants to create jobs, but it's afraid of increased deficits and debt. This, like the '92 debate question, is a mistake. The debt isn't the problem; unemployment is.

As Speaker Pelosi explained last week, "We're never going to decrease the deficit until we create jobs, bring revenue into the Treasury, stimulate the economy so we have growth. We have to shed any weakness that anybody may have about not wanting to be confrontational on this subject for fear that we'd be labeled not sensitive to the deficit.... The American people have an anger about the growth of the deficit because they're not getting anything for it."

The assumption is that voters will be impressed if policymakers bring down the deficit by a fraction of a percent against GDP. They'll be far more impressed with those who get America working again.

Steve Benen 10:05 AM Permalink | Trackbacks | Comments (12)

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If they want to get re-elected, they'd best focus on jobs. The folks who claim to be losing sleep over the deficit aren't going to vote for the Dems or Obama anyway - because they're the same folks who weren't worried at all about the deficit until about a year ago. People who can't pay their bills don't have a lot of time to spend worrying about the national deficit.

Posted by: Jennifer on December 3, 2009 at 10:13 AM | PERMALINK

The problem here is the new paradigm at work. Under Republicans, deficits don't matter. Joblessness doesn't matter. Flat economic growth does not matter. At least according to the media.

But when Democrats assume power, all of these things become over-riding concerns--especially the deficit. Thus, when Bush started two wars and simply moved the costs "off budget," the costs were of no concern. Now that Obama is forced to deal with those two wars, the costs are a top priority in the press. On the eve of Obama's speech, Chuck Todd made the "how will Obama pay for Afghanistan?" the centerpiece of his reporting.

Any wonder why the President is concerned about the deficit? That's the sole topic of conversation inside the beltway.

Posted by: Domage on December 3, 2009 at 10:26 AM | PERMALINK

Jobs and Afghanistan are going to sink Obama. He's already fucked himself on the latter. He seems poised to do the same on the former. Oh well: it was a nice ride for a while ...

Posted by: sjw on December 3, 2009 at 10:26 AM | PERMALINK

It is extremely naive to suggest expectations of current/future deficits are not tightly linked to short-term employment. In fact, fear of future deficits, will have (and has had) a direct and substantive impact on the size of anticipated economic multipliers to fiscal stimulus. ("Methinks" it was not the size of the stimulus that failed to check unemployment as predicted, rather the impact on rational expectations.)

The difference between Clinton and Obama -- Clinton's empathy in the situation the article describes, etal. -- served to dampen fears and inspire confidence. A lesson Obama would be well-served to observe.

Posted by: m on December 3, 2009 at 10:30 AM | PERMALINK

The Washington Post report on the summit, however, noted that Obama administration officials are "unwilling to make any investments that would add significantly to the nation's ballooning deficit."

I hope Obama enjoys his one term.

Posted by: kc on December 3, 2009 at 10:36 AM | PERMALINK

There are a variety of things that can be done which would be deficit neutral or perhaps positive. One is health care reform if the Dems are right that it will actually serve to bend the curve of unstainable cost increases. I think a great idea would be to reduce Medicare eligibility to 62 to coincide with early social security. While this would increase the structural problems Medicare faces, it would allow some people to retire earlier thereby opening up jobs for young people who would be paying into Medicare. There has been a lot of talk about a payroll tax holiday for social security. This is not a bad idea because social security is very solvent for the forseeable future and I think it could be improved by only eliminating the employer's share on say the first $20-$30 K and taking the cap off the employer's share to pay for it. Net effect, it becomes much cheaper to hire the lowest skilled workers, there would be a slight dampening of employers enthusiasm to pay salary's above $110K and there would be only a negligible effect on social security. A third thought would be to change cap and trade into a money maker on carbon. The key would be to getting the money back into the hands of consumers in an equal manner to taking it out or else you depress the economy. If you can do that and business are able to pass on all the added costs to consumers, it is a jobs creater because it makes all non carbon based energy more profitable.

Posted by: Terry on December 3, 2009 at 11:04 AM | PERMALINK

This is why Obama's escalation in Afghanistan is so completely fucked.

He SHOULD have just said, "we don't have the money. We're pulling out our troops and going home. Any of you fools who want to continue this, 'make me,' by passing a draft and a tax increase."

I am dumbfounded at how Obama and the Republicans [and Blue Dogs] can howl about the deficit when the subjects of stimulus, unemployment benefits, education, health care, infrastructure come up, but are deaf, dumb and blind about it with regard to war.

I guess it's like Sara Palin says, "who can put a price on our national security."

Posted by: mauimom on December 3, 2009 at 11:57 AM | PERMALINK

To paraphrase a famous saying: "It's the unemployment, stupid."

Posted by: Kid Charles on December 3, 2009 at 12:47 PM | PERMALINK

"Did I ever tell you you play a very irritating game of chess, Mr. Spock?" - Capt. James T Kirk

Posted by: jtk on December 3, 2009 at 1:00 PM | PERMALINK

Obama and the Congressional Democrats made a HUGE mistake by not using the reconciliation process to pass a stimulus bill large enough to get the job done.

Now, they should tell the Republicans to go fuck themselves and use the reconciliation process to pass a job creation bill, and pass the healthcare bill with a robust Public Option.

Then, when the jobs start getting created & unemployment falls, and all the consumer protections are in place for healthcare that everyone who has coverage will LOVE, they can GAIN SEATS in the mid-term elections by showing that they were correct and the Republicans were wrong.

No guts. No glory.

Posted by: Joe Friday on December 3, 2009 at 1:41 PM | PERMALINK

Now the WH is talking about cutting Social Security and Medicare after bailing out the rich on Wall St.

Who the fuck are these people? They're sure as hell not Democrats. Did Rahm decide all the Wall St banksters with fat bonuses can hire the rest of us as maids and gardeners?

The Democrats are going to get slaughtered in the 2010 and 2012 elections.

Posted by: Glen on December 3, 2009 at 11:54 PM | PERMALINK

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Posted by: Nita on February 26, 2010 at 3:33 PM | PERMALINK
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