Monday, August 15, 2011

Obama Team Debates Characteristically Cautious Economic Plans

The New York Times reports that the Obama administration is debating economic and jobs proposals. The ideas of both the pragmatic and supposedly aggressive camps are noteworthy for the caution that characterizes this administration. The administration could call for more stimulus and a jobs program repairing our crumbling infrastructure, for example. But many voters and all of the Republicans won’t like it, so why fight for it? Instead, tax incentives for hiring is one of the "big ideas." In addition, the president still hasn't given up on a "grand bargain" containing even larger spending cuts:

Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. These include free trade agreements and improved patent protections for inventors.

But others, including Gene Sperling, Mr. Obama’s chief economic adviser, say public anger over the debt ceiling debate has weakened Republicans and created an opening for bigger ideas like tax incentives for businesses that hire more workers....

...So far, most signs point to a continuation of the nonconfrontational approach — better to do something than nothing — that has defined this administration...

...A wide range of economists say the administration should call for a new round of stimulus spending, as prescribed by mainstream economic theory, to create jobs and promote growth. It is clear that the House would never pass such a plan.

But Christina Romer, who stepped down last year as the chairwoman of the president’s Council of Economic Advisers, said Mr. Obama should fight for short-term spending in combination with long-term deficit reduction.

“Playing it safe is not going to cut it,” said Ms. Romer, a professor of economics at the University of California, Berkeley. “Not proposing anything bold and not trying to do something to definitively deal with our problems would mean that we’re going to have another year and a half like the last year and a half — and then it’s awfully hard to get re-elected.”

But there is little support for such an approach inside the administration...

...As part of this appeal to centrist voters, the president intends to continue his push for a so-called grand bargain on deficit reduction — a deal with Republicans to make even larger spending cuts, including to the social safety net, in exchange for some revenue increases...

Administration officials say that their focus is on a number of smaller programs that could benefit the economy, a theme Mr. Obama has emphasized in his recent speeches.

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