The President's Weekly Address

In his weekly address, the President pledges to rein in the deficit, citing three specific steps to this end. He praises the Senate for restoring the pay-as-you-go law, discusses his proposal for a freeze in discretionary spending, and calls for a bipartisan Fiscal Commission to hammer out further concrete deficit reduction proposals.

While the President notes that his number one priority is job creation, he seems to be putting more focus on controlling the deficit. I'm not sure these are goals that can be tackled concurrently. To give you a measure of the unemployment problem, I'll point to one statistic. Speaking on a panel on the topic of the global economic outlook at the annual meeting of the World Economic Forum in Davos, Larry Summers, the chief economic advisor in the Obama Administration, noted that one in five American men aged 25 to 54 are unemployed. He described the US economic situation as “statistical recovery and a human recession.”

Dr. Summers went on to say that given a “reasonable recovery,” that rate could improve to one in seven or one in eight. That still contrasts with a 95 percent employment rate for that group in the mid-1960s. One in eight is still 12.5 percent. Such a level is simply not acceptable nor do I believe achievable without direct government intervention in the economy. The reality is that our current economic model is broken for the overwhelming number of Americans. That the economic model, one that favors the aggrandizement of financial assets over the creation of productive assets, works for the financial elites is not in question but for the middle classes, the American dream is fast becoming a nightmare. There are simply no jobs to be had.

At any rate, the President is unveiling a new proposal involving a $33 billion tax credit aimed at small businesses in the hopes of stimulating job creation by reducing payroll taxes.

More on this from the New York Times:

In proposing a one-year, $33 billion tax credit for small businesses, the Obama administration is simultaneously seeking to stimulate hiring by reducing payroll taxes and to turn its attention to a constituency that has historically been associated with Republicans.

Hours after the Commerce Department announced that economic growth had picked up at the end of last year, President Obama visited a machine plant in Baltimore on Friday to promote the plan, which would give companies a tax credit of up to $5,000 for each new hire and reimburse them for Social Security taxes if they expand their payrolls. The credit is capped at $500,000 for each employer.

“Now is the perfect time for this kind of incentive because the economy is growing, but businesses are still hesitant to start hiring again,” Mr. Obama said at the Chesapeake Machine Company, which makes custom industrial equipment.

Earlier this month, the nonpartisan Congressional Budget Office concluded that reducing the payroll taxes of employers would be the most cost-effective approach — after extending unemployment benefits — to stimulating economic output and job growth.

Even though this latest proposal is out of the GOP playbook, Republicans have had a muted response. Representative Dave Camp of Michigan, the top Republican on the House Ways and Means Committee, which oversees tax matters, said, “A sprinkling here and there of a few poll-tested proposals won’t provide enough help or get small businesses hiring again.”

And so it goes.

 

Tags: President Barack Obama, US Economy (all tags)

Comments

20 Comments

Obama is not trying

to win street cred with the GOP, but rather, with independent and moderate voters who supported him but have become anxious. These voters are nervous and ill-informed and have certainly bought into the deficit stuff being hawked by Republicans and the MSM. Whether Obama's strategy will work is unknown. But I think he is proposing these minimal cuts or freezes to make people more comfortable with the spending for jobs.

I feel like progressives always accuse Obama of trying to win over GOP leaders when I think he is trying to win over voters or public support. Those are very different things.

by Lolis 2010-01-31 12:22AM | 2 recs
Their concern isn't unfounded.

Large deficits are problematic. I don't fully understand the economics, but from what I can tell, running a huge deficit can lead to various economic problems like inflation and currency devaluation.

Of course, Independents' concerns over the deficit are purely coincidental. They didn't cry when George Bush was in office.

Sadly, the zombie meme of deficit tax and spending liberals lives on, so powerful that no one ever stopped to question George W. who put it there in the first place.

Now what can Obama do without spending more?

by NoFortunateSon 2010-01-31 02:41AM | 1 recs
RE: Their concern isn't unfounded.

There is a time, and a place, for reining in deficits.....Read up what Paul Krugman has been saying for more details on this: 

Pretending To Be Stupid

by Ravi Verma 2010-01-31 04:26PM | 0 recs
yeah and we're approaching that place

the time and place is when the economy starts expanding again...it will by the time Obama's spending freeze is actually enacted...20 months from now.

by ND22 2010-01-31 09:43PM | 0 recs
yeah!

the statistical recovery will be in full bloom by then.  Time to party!!

by Ravi Verma 2010-02-01 12:09AM | 0 recs
Yeah, but

The question is: how much deficit is too much?

If the deficit were $1 trillion, the point would be moot. But what if Obama sepnt another $7 trillion to bring the deficit to $20 trillion.

Would that still be okay?

Krugman is just one voice and his point is duly noted. I don't take what he says as gospel, especially since he faces no consequences for being wrong.

by NoFortunateSon 2010-02-01 01:03AM | 0 recs
Unfortunately,

noone faces any consequences for being wrong... not even those who have the power to make a difference if they are right.

How much deficit is too much ?  I dont know the answer to that... it depends on what the deficit is being used for (deficits for manufactring innovation is better than deficits for financial innovation), but it is also not the right question to be asking.

The right question is "what is the appropriate amount of government spending", and there is a good way to estimate that, if you are trying to avoid (or mitigate against) a recession.  Govt. spending must compensate for reduced PCE, and reduced business expenditures...if you want to avoid a recession (a jobs recession).  The deficit follows from that.

Is a 1 trillion deficit okay ?  As per the above considerations, the deficit should have been increased to around 2T last year.

But, it is much more comfortable to note that Krugman is just another voice, and his rationale need not be taken as gospel, without offering any rationales as to why his rationale is flawed!!

 

 

by Ravi Verma 2010-02-01 01:26AM | 0 recs
RE: Their concern isn't unfounded.

Large deficits can be countered by a treaty recognizing odious debt, eliminating the private insurance system in favor of universal healthcare and ending corporate welfare.  

by The Weekly Glass 2010-01-31 04:32PM | 0 recs
um

oooook

by ND22 2010-01-31 09:43PM | 0 recs
RE: The President's Weekly Address

1.  Muted from the Republicans = scared shitless he may gain traction on THIER issues.

 

2.  What was the ACTUAL number of men aged 25-54 in the 1960's vs. now, not just a percentage?  We have more people, but do not necessarily need them to make more stuff.

3. How many WOMEN 25-54 were employed in the 1960's vs. today, in ACTUAL numbers, not just by percentage. 

Maybe instead of a numbers game, we should be looking at what the HOUSEHOLD level of responsability is vs. access to resources.  A single mom on less than $10/hr with daycare expenses is going to be in a WHOLE different boat than a married couple, with each making - say $40k a year job and no kids. 

by Hammer1001 2010-01-31 01:40AM | 0 recs
This is just the problem I have with Obama's advisors.

"Dr. Summers went on to say that given a “reasonable recovery,” that rate could improve to one in seven or one in eight. That still contrasts with a 95 percent employment rate for that group in the mid-1960s. One in eight is still 12.5 percent. Such a level is simply not acceptable...."

Reagan also ignored unemployment, even homelessness for three years, during the early 80s recession. It is the topdown approach of the Republicans, save the fat cats first, then the working class. Deficit reduction at these times is also a Republican tactic.

 

by MainStreet 2010-01-31 11:26AM | 0 recs
Obama is ignoring joblessness? Or...

Obama is powerless to affect it in a rapid nd substantial manner?

The word from the WH has always been that joblessness will be slow to recede. I'm hoping we're below 10% next month.

Lot's of us like to believe Obama is G0d, especially after watching that beat down of Republicans. But I must conclude that there are still practical barriers to lowering joblessless in a safe and lasting manner. The pundits and hacks have their talking points. Just spend more, they say. Obama's job rests on lowering unemployment. I have to wonder if, as with the Republicans, Obama is right, and there is no easy solution.

 

by NoFortunateSon 2010-02-01 01:09AM | 0 recs
RE: Obama is ignoring joblessness? Or...

this seems to be the syndrome Steve M. has talked about where for some people on here, if Obama didn't do it, then it must not have been possible.

 

by jeopardy 2010-02-01 10:39AM | 0 recs
RE: The President's Weekly Address

There are two issues here, the substantive policy and the politics.

Policy:

A tax credit grows the deficit even more. While now is not really the time to worry too much about deficits (better dealt with when the economy is strong), tax cuts are generally not as stimulative as certain types of government spending. But it is conceivable that a tax cut targeted this way could help with the specific problem of unemployment, even if it isn't efficient in an overall "stimulus" way.

 

Politically:

The president seems intent on moving to the right and coopting GOP ideas. This may be good in the short run in terms of Obama's (or maybe even Democrats') popularity, but it legitimizes stupid GOP ideas and talking points and that is not good for this country going forward. It's basically saying "the Republicans are correct".

My major dissapointment with Obama is that I thought he would use his extrodinary skills to move public opinion, to work towards legitimizing more progressive ideals in the minds of Americans (like Reagan did for the conservatives). There was a real opportunity here.

Instead, he seems to have set upon a path of using his persuasive abilities to continue to convince Americans that tax cuts and reduced government is what we should be striving for.

 

by jeopardy 2010-01-31 12:13PM | 1 recs
RE: The President's Weekly Address

<blockquote>My major dissapointment with Obama is that I thought he would use his extrodinary skills to move public opinion, to work towards legitimizing more progressive ideals in the minds of Americans (like Reagan did for the conservatives). There was a real opportunity here.</blockquote>

and all his attempts to do so were met with endless media discussion of how "overexposed" he was and how he's taking on too much, followed by 24/7 coverage of crazies marching in the streets against socialism and what not.

There was no real opportunity. The media wouldn't allow it

by ND22 2010-01-31 09:45PM | 0 recs
RE: The President's Weekly Address

so freaking what?

oh no, he's "overexposed"! there's no choce other than telling everybody that Reagan had the correct ideas then!

by jeopardy 2010-02-01 10:37AM | 0 recs
which

he never did

by ND22 2010-02-01 09:15PM | 0 recs
The drunken sailor principle of policymaking...

Explode the deficit by a trillion dollars because....

Then vow to rein in the deficit because deficits are bad !!

I hope this is just another cynical ploy to win over the moderates !!!

 

by Ravi Verma 2010-01-31 04:23PM | 1 recs
This is simply smart politics

The budget freeze is largely symbolic and Obama is outplaying the Republicans yet again. Take an issue your opponents will likely use against you. Steal* this issue from them by getting out in front before they can form a narrative that permeates with the bulk of the "undecideds." This strategy robs them of one of their few talking points that make any sense at all. Not that we should really be worrying about deficits in this economy.

Once Obama has a reputation as a deficit hawk, he will have an easier time spending on things that the Republicans will wail about as deficit ballooners. Once you have the reputation as an early riser, few will give you grief when you sleep in.

* When you borrow something, you have to give it back. It isn't really yours. When you steal it, you make it your own.

by lucky monkey 2010-02-01 01:14AM | 0 recs
When you steal it, you make it your own.

God Bless America, and not-so-much the people we stole it from.

by QTG 2010-02-01 08:34AM | 0 recs

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