Our long-term deficit problem is troubling. But more troubling is the prospect of lasting unemployment with more than 10 percent of the labor force -- and more than 10 million Americans -- living off federal unemployment benefits for up to two years. The better thing is to spend more (yes, increase the deficit) to put more Americans back to work so that they can start producing, earning and paying tax receipts rather than living off Washington's largesse.
This Thursday Obama will host a "Jobs Summit" to brainstorm ideas for job creation. I hope the whole buffet is on the table -- from payroll tax cuts to tax credits for companies who hire to job sharing to direct public works spending.
Some politicians sound afraid of a job stimulus because it would increase the deficit. That's understandable -- the deficit is huge now -- but also weird. It's weird from a policy perspective because $400 billion of the 2009 deficit came from lower tax receipts and only about $150 billion came from spending. We need higher tax receipts to make up the deficits and we need Americans in jobs to have taxable income. That seems straightforward.
DC's sluggishness is weird from a political perspective because you'd think a bill built on the pillars of "Tax credit" and "More jobs" would be an easy sell. Many of the ideas on the table are essentially government handouts to companies in the hopes that employers will use the extra money to expand their payrolls.
If Washington is really concerned about a public backlash against job creation at the end of a recession, then I've got a solution: More summits! No seriously, more summits!
Another summit to begin to discuss ways to trim the deficit would do a couple important things. First it would show deficit hawks that Obama is serious about creating jobs in the short term and cutting spending in the long term. Second it would show international investors that we're serious about about shoring up our receipts/outlays imbalance, which should encourage them to keep lending us money (...although I don't see any particular reason why they would stop, especially with the Dubai World fiasco elevating the comparative trustworthiness of American debt.)
Obama doesn't need to go all-in on a binding bipartisan commission to kill the deficit. Not yet, anyway. Just keep the two musts in order. Job creation today. Deficit destruction tomorrow.