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Obama's wandering economic message

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By Michael Gerson
Wednesday, September 1, 2010

After a first year mainly focused on health reform, and a bleak December 2009 employment report, the Obama administration was finally ready to talk, in Chief of Staff Rahm Emanuel's words, about "jobs, jobs, jobs." Strategist David Axelrod admitted the Obama team was recalibrating to focus on the economy. President Obama said, "We have to continue to work every single day to get our economy moving again. For most Americans, and for me, that means jobs."

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Six months later, following additional health-reform drama, arcane financial reform, a national immigration debate and a sluggish oil spill response, 67 percent of Americans said the president had not focused enough on job creation.

July's jobs report was again dreary, with 181,000 discouraged workers dropping out of the labor force entirely. Advice for the president from Democratic strategists and nervous Democratic legislators was nearly uniform: Focus on jobs. The president proceeded to enter the Manhattan mosque controversy, mark the fifth anniversary of Hurricane Katrina, and address the nation on Iraq and Afghanistan. During an interview with Brian Williams last weekend, Obama made news commenting on his religious faith, on Glenn Beck's rally in Washington and on the "birther" movement.

This is a president who has lost control of his public message. It wanders unleashed from park to alley, stopping to sniff every cable news story along the way. Some blame a political and communications team that is reactive and undisciplined. But there is another possibility. Perhaps the president doesn't talk about job creation because he doesn't have much to say.

Obama has tried a number of economic messages. If I hadn't spent a lot of money, you would be even more miserable than you currently are hasn't worked very well, especially since the administration predicted that its stimulus spending would keep unemployment around 8 percent. Don't blame me, blame Bush is negative and backward-looking. Just give me a little more time and things will work out seems both passive and plaintive. Obama would do another round of stimulus spending if he could -- the primary Democratic approach to job creation. But having spent beyond public patience, this isn't a realistic option.

Now, two months before the midterm elections, the president is again trying to pivot to job creation, calling attention to some small-business tax reductions. But his message is about to be overwhelmed.

The primary economic debate between now and the election will concern the tax reductions of 2001 and 2003 -- President Bush's economic stimulus -- which are due to expire on Dec. 31 unless Congress acts. Obama has proposed to eliminate the portion of that stimulus that goes to wealthier taxpayers. Republicans oppose any tax increases in a feeble economy. The result is a high-stakes game of chicken, with just a few possible outcomes.

First, Democrats might break a Senate filibuster by persuading some Republicans to support an extension of Bush's tax cuts for the middle class but not the wealthy. Momentum, however, runs in the other direction. Republicans are unlikely to give the president a legislative victory immediately before the midterms, particularly one that increases taxes. And two Democratic senators, Kent Conrad of North Dakota and Evan Bayh of Indiana, have expressed support for at least a temporary extension of all the Bush tax cuts.

Second, Democrats and Republicans could agree to a temporary extension, deferring a decision on tax increases until the economy strengthens. But this would be a major loss for the administration -- the abandonment of a long-standing promise to repeal the Bush tax cuts for the rich.

Third, there could be a standoff, resulting in the expiration of all the Bush tax cuts -- for the middle class as well as the wealthy -- thus kicking an economy that is struggling to rise.

The problem for Obama is this: Even his best outcome in this political struggle would have little to do with job creation. An economist might argue that the resources used to extend tax reductions for the wealthy would have quicker stimulative effect if given instead to the poor, who save a smaller share of each dollar they receive. But Obama's tax increase on the rich would be used to reduce the deficit, resulting in a net contraction of economic activity. Tax increases to pay for past spending do not stimulate the economy.

So Democrats are left with a stark choice between soaking the rich and stimulating the economy. And Obama's message of jobs, jobs, jobs, once again, is bound to stray.

michaelgerson@washpost.com

For more from Michael Gerson on the president's messaging, read At an historic moment, Obama's forgettable Iraq speech.


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