Akron Beacon Journal...
Job for the president
August 23, 2011 

President Obama will try again to take command of the debate over the iffy economy. For the past year, Republicans have been shaping the discussion, pointing to the rising national debt, arguing for a heavy dose of austerity, staging a crisis involving the debt ceiling. The president has promised a big speech after Labor Day. He wants to shift the focus to job creation. It is a conversation the country must have, Washington facing the imperative of doing two things at once. 

What are the two things? A struggling economy requires spending to bolster demand and curb further job losses. That is the immediate task. For the longer term, or once the economy gains strength, the country must deal with its huge fiscal imbalance, bringing the federal budget deficit into the responsible range of 3 percent of the overall economy. Enact measures now that would deliver mostly during the next decade. 

During his recent bus tour through Iowa, Minnesota and Illinois, the president reiterated his ultimate goal of deficit reduction along the lines of $4 trillion over 10 years. A large chunk of that could be achieved by allowing the Bush tax cuts to expire, returning to the income tax rates of the job-producing 1990s. Spending cuts must share the billing, the president getting specific, proposing, say, a means-test for Medicare, the leading driver of increased spending in the decades ahead. 

By far, the greater test will be making the case for an additional dose of stimulus spending now. Many Republicans pitch the idea that what the economy needs at the moment is paring back government to unleash private job creation. What they overlook is the core of the current problem; a lack of demand, households, businesses and governments spending and investing less. 

Reduce government spending, and you aggravate the difficulty, say, school districts laying off teachers Many businesses aren’t sitting on their hands because of uncertainty. They know there is an absence of consumer spending.

With that in mind, the president must propose an extension of unemployment benefits, a continuation of the payroll tax break, aid to states and cities (the money going directly to each). Now is the moment to invest in sagging public works, especially with interest rates at such low levels. More, the White House must pursue the restructuring of at-risk mortgages in a more aggressive way, taking aim the massive overhang of debt, and its dampening effect on the economy. 

To be sure, these and similar measures amount to pie in the sky. Republicans won’t permit them to move forward. Yet the president must make plain to the country what actually afflicts the economy, that smart policy requires moving forward on two tracks. He must stress what many economists relay. If increased spending initially adds to the deficit, it promises to keep red ink at a lower level over time, boosting business activity, lowering unemployment, delivering demand. 

Read it at the Akron Beacon Journal