Obama's job summit challenge: creating jobs on a budget
President Obama's job summit this week brings together CEOs and economists to brainstorm on how to bring down the unemployment rate. The challenge: creating jobs while trying to control record deficits.
President Obama is slogging through difficult terrain by holding a so-called "jobs summit" this week. More than 15 million Americans are looking for work, a record number in more than six decades of Labor Department tracking. But government efforts to create jobs will cost money at a time when federal budget is soaring into its own record territory.Skip to next paragraph
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Mr. Obama can't avoid either of these issues – the unemployment or the deficits.
Officially, the jobs forum is a chance for him to seek ideas and consensus from business leaders about what can boost hiring. But in the build-up to the meeting, it's become clear that the White House is also trying to figure out how to balance these challenges – how to create jobs on a budget.
Most forecasters expect the economy to start adding jobs next year, but not at a strong enough pace to bring the unemployment rate down sharply from the current 10.2 percent. With that as a backdrop, Obama may support tax credits or other programs to designed to spur hiring. But he’ll also be watching the price tag, in part because polls show Americans to be worried about what rising federal deficits will mean for future prosperity and for their own pocketbooks.
Some of the participants in the forum will urge Obama and Congress not to worry so much about deficits. Rather, they will argue, the government should spend to create jobs either indirectly through tax incentives that affect private employers, or directly by government spending on roads, green energy, or community service programs.
Their reasoning: Unemployment has become much worse than the White House envisioned when it made the case early this year for a $787 stimulus program. The federal debt is a significant long-run problem, fueled more by healthcare programs than by temporary stimulus efforts. The Treasury's fiscal troubles could actually be made worse, they add, if policymakers fail to get the economy moving.
It's an argument right out of economics textbooks. When the economy is mired in a downturn, the last thing you want to do is focus on reducing budget deficits.