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Sunday, January 23, 2011

SOTU: Obama's Focus on Jobs

This is a year too late, more than that actually, but President Obama's intent to focus on jobs in the State of the Union address is welcome. The abandonment of the recommendations of the bipartisan majority on the debt-reduction commission -- for now anyway -- is also good news. This committee appeared to have Social Security in its sights mostly for ideological reasons rather than as something that would make a meaningful dent in the budget problem. However, some of the things emphasized in the speech do bring some concerns. In particular, Obama's new found friendliness toward business and the seeming embrace of a principle of what's good for business is good for America could lead him astray:

Obama to Press Centrist Agenda in His Address, NY Times: President Obama will outline an agenda for “winning the future” in his State of the Union address on Tuesday night, striking a theme of national unity and renewal as he stresses the need for government spending in key areas and an attack on the budget deficit.
Mr. Obama previewed ... that his speech would be geared more broadly toward the political center, to independent voters and business owners and executives alienated by the expansion of government and the partisan legislative fights of the past two years. ...
Mr. Obama has signaled that after two years in which his response to the economic crisis and his push for passage of the health care bill defined him to many voters as a big-government liberal, he is seeking to recast himself as a more business-friendly, pragmatic progressive.
That means emphasizing job creation, deficit reduction and a willingness to compromise in a new period of divided government. But it also means a willingness to make the case for spending — or investment, as many in his party would prefer to call it — in areas like education, transportation and technological innovation ... essential to the nation’s long-term prosperity. ...
Without going into detail, he will touch on issues like overhauling the corporate tax code and encouraging exports, and he will defend his health care law. ...
Mr. Obama is unlikely, they said, to embrace the recommendations of a bipartisan majority on the debt-reduction commission he created, which proposed slashing projected annual deficits through 2020 with deep cuts in domestic and military spending, changes to Social Security and Medicare, and an overhaul of the individual and corporate tax codes...
In general, the theme of deficit reduction will be less prominent in the speech as Mr. Obama emphasizes spending “investments” and “responsible” budget cutting...
Advisers said the president would describe five “pillars” for ensuring America’s competitiveness and economic growth: innovation, education, infrastructure, deficit reduction and reforming government. ...
“He’s making the transition from an economic security president to an economic growth president,” said Jim Kessler, co-founder of the centrist organization Third Way, “and he’s moving from the left to the center.” ...

While I'm happy about the focus on jobs, we shouldn't get our hopes up too much. There are job programs that are intended to carry people through the down side of a business cycle -- short run initiatives to put people to work that have been largely missing in the response to the crisis -- and there are initiatives that are designed to increase economic growth and create jobs over the longer run. I expect the focus will be much more on creating jobs through long-run growth than on the more immediate unemployment problem (which means a likely embrace of the GOP's claim that tax cuts lead to jobs -- though see here for a rebuttal to the claim that tax cuts spur economic growth). And to the extent that the president does focus on more immediate needs, it's unlikely to find support in Congress even with a strong move to (and even past) the center. These initiatives will be about long-run growth and a more hopeful future (and mostly confined to tax cuts, or to use the terms above "tax overhaul," if the GOP gets its way). That is surely needed, hope for the future has eroded substantially with the crisis, but we also have millions of people out of work right now and they need attention too.

[Also posted at CBS MoneyWatch.]

    Posted by on Sunday, January 23, 2011 at 11:34 AM in Economics, Politics, Unions | Permalink  Comments (29)

          


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