Nov 082012

President Obama should not allow conservatives to define the agenda for the next four years. The very high priority granted to dealing with the fiscal cliff is a distraction because it defines the issue in terms chosen by the conservative faction. The true issue Obama is facing is the same one he faced four years ago: how to make the economy grow at a higher rate and reduce unemployment. This in turn requires (a) more, not less, stimulus now and (b) fixing the housing market–not adding drags to the economy by cutting spending and raising taxes at this point in time. Even taxing the rich a “bit more” (as the president put it) is of secondary concern. It will not raise much money nor bring much justice. In contrast, reducing unemployment and ending foreclosures, will be much more consequential on both fronts.

With respect to reducing unemployment, although investing in education is an essential idea, it pays off only over the long run, as kids become adults. For now, the focus should be on hiring more teachers, which directly reduces unemployment, increasing funding for not-for-profit community colleges, and retraining workers. Investing in the infrastructure, too, is an essential idea, however such investment generates relatively few jobs because much of the money goes to capital goods (e.g., steel), many of which are made overseas. For now, the focus should be on those projects that generate many new local jobs–for instance installing solar panels or making pathways for bikes.

In contrast, if the economy continues to be sluggish in 2014, after six years of Obama, the narrative “I need more time” will not play. It could turn into another 2004-like election which is about the last thing the nation needs.

Read the full article at The Huffington Post.

 Posted by at 4:25 pm

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