As the administration sees it, both projects point toward the same sort of plan: a package of job-creation ideas that are thoroughly bipartisan and clearly popular, and a package of deficit-reducing offsets that show that they are willing to make hard choices, and even anger members of their own party, in the name of fiscal discipline.
The bulk of what will be in President Obama’s jobs speech Thursday will not be new stimulus. The big-ticket items will be a slightly expanded version of the payroll tax cut and an extension of unemployment insurance. Together, these two pieces cost about $200 billion a year, which accounts for most of the $300-$400 billion in jobs spending that the White House is set to announce. But since they are already in effect, extending them will not, from an economic point of view, add much new demand into the economy. It will simply prevent demand from being sucked out. The rest of the proposal is likely to be an infrastructure plan — I would expect the price tag here to be in the $50-$100 billion range for 2012 — and more state and local aid. There will also be a call for Fannie and Freddie to extend refinancing help to more underwater homeowners.
Getting less attention in the media is the follow-up speech the White House is planning, which will lay out a specific deficit-reduction agenda that not only meets the $1.5 trillion goal of the “supercommittee,” but exceeds it and pays for the new jobs spending. These proposals will look quite similar to the grand bargain the White House offered Speaker John Boehner, and liberal groups are grimly preparing for the administration to call for raising the Medicare eligibility age.
This leaves a couple of questions that keep pinging into my in-box from interested and, more often, angry observers around town: Why not go bigger on jobs given that so little is likely to pass? Why not go smaller on deficit reduction given that Republicans are likely to take the administration’s concessions on policies like the Medicare eligibility age but toss out their preferences on revenues and stimulus? And what evidence is there, anyway, that trying to look like the most reasonable man in the room is actually working with independents?
But my question is a little different: Why stop with a speech? The leverage the White House currently has over this process is that they can veto whatever the supercommittee produces, if it indeed produces anything. If they do that, the trigger gets pulled, and the White House assures us that both parties are terrified of the trigger.
So what I’m waiting to see Thursday is whether the president says he will veto any plan that addresses deficits while ignoring joblessness. If he wants to appeal to the presumed mass of deficit-hating independents, he can also say he will veto any plan that addresses joblessness without dealing with deficits, though no such plan is likely to emerge. Since the twin priorities here are passing something and letting voters know what you stand for, then the way forward would seem clear: Stand firm until something you can support actually passes. A speech — or even two speeches — won’t lead to new legislation, and it won’t command enough sustained public attention or media coverage to make voters of any stripe sit up and notice.