A job-seeker looks at a bulletin at the Texas Workforce Commission's Workforce Solutions of Greater Dallas job resource center July 5. (LM OTERO/ASSOCIATED PRESS)

The gap isn't necessarily the Obama administration's fault. Republicans control the House of Representatives and more than 40 seats in the Senate. They have a say in this too, and they have clearly said "no." But the difference between what the Obama administration knows it needs to do and believes it can do speaks to perhaps the most difficult problem they face going into 2012: How do you talk about jobs when you can't really do anything about them?

Talking about jobs is assumed to be good politics, but that's mostly because creating jobs is known to be good politics, and it's assumed that one has something to do with the other. But another pivot to jobs, followed by another string of underwhelming jobs reports, can also be bad politics: there's a difference between showing that you're trying, and looking like you've tried and failed. If voters blame Republicans for blocking jobs measures and undermining a recovery the Obama administration's policies could hasten, David Plouffe can go to bed smiling every night. But if they instead assume that the jobs aren't coming back because the Obama administration's approach to jobs simply doesn't work, that's a bigger problem for the White House, as it leads naturally and swiftly to the idea that it's time to give someone else, someone with different ideas that haven't been proven impotent, a try.

This wasn't a needle the Obama administration was able to thread on the stimulus. Voters concluded the policy didn't work rather than that Republicans effectively stood in its way and, given the size of the recession, it wasn't sufficiently tried. Can they thread it now?

Five in the morning

1) The Obama administration is weighing new job creation measures, reports Zachary Goldfarb: "White House officials are weighing a proposal to offer tax cuts to employers in return for hiring new workers. The administration considered this idea last year, but it gave way to a broader payroll tax deduction for workers in a bipartisan deal in December. In addition, administration officials are considering proposing new investments in domestic clean energy as well as renewing tax breaks for companies using renewable energy — particularly wind power — that are to expire this year. Also on the table is an initiative designed to help the ailing housing market without the need for more public spending. Under that proposal, the government-controlled mortgage giants Fannie Mae and Freddie Mac would rent out foreclosed properties that they own rather than try to sell them at depressed prices."

Suzy Khimm reports on five more ideas they could try:

2) The FAA's shutdown doesn't look like it'll be resolved soon, reports Ashley Halsey: "A dispute over funding for the Federal Aviation Administration has left an estimated 74,000 people out of work for a dozen days and tossed Congress into the throes of yet another interparty battle. Now, with lawmakers leaving town or already on recess, there seems to be little hope of a resolution on the horizon. Lawmakers allowed funding for the FAA to expire July 23, leaving 4,000 agency workers on furlough and 70,000 people in construction-related jobs out of work, possibly until September, when Congress will reconvene. On Wednesday, party leaders blamed each other for the deadlock, and President Obama said Congress had 'decided to play politics' and put the the nation’s fragile economic recovery at risk. He said he expects a resolution of the issue by the end of the week."

Confused by this story? Here's everything you need to know about the FAA shutdown in one post.

3) Tim Geithner is staying on, reports Jackie Calmes: "Timothy F. Geithner, the Treasury secretary and dean of President Obama’s economic team, is expected to stay through the president’s term after intense White House pressure, according to officials familiar with the discussions. ... Speculation from Washington to Wall Street has intensified because Mr. Geithner, the only holdover at the center of Mr. Obama’s original economic circle, said a month ago that he would decide on his future after the White House and Congress reached a deal to increase the nation’s debt ceiling. ... Mr. Obama and his chief of staff, William M. Daley, have been urging Mr. Geithner to stay, administration officials say, not only for continuity when the economy has weakened and to avoid an all-but-certain confirmation fight in the Senate over a successor."

4) The White House used Wall Street to its advantage during the debt debate, Aaron Lucchetti, Dan Fitzpatrick and Liz Rappaport report: "Often at odds since the financial crisis, banks and the White House found themselves on the same side in recent weeks as they worked to back a compromise that would fend off a default by the U.S. government. White House Chief of Staff Bill Daley even tried to enlist the help of his former employer, J.P. Morgan Chase & Co., as part of a final push to get a deal done in Congress, said people familiar with the situation. White House officials including Mr. Daley and senior adviser Valerie Jarrett placed calls to banks, according to people familiar with the matter. ... The message from administration officials: Contact key senators and congressman in both parties to tell them that an agreement was crucial for business confidence and the economy."

5) Every future debt ceiling increase should be like this one, writes Sen. Rob Portman: "With this latest debt-limit increase, Congress — at the wise suggestion of House Speaker John Boehner — adopted a new standard: that the bill raising the debt limit must also cut an equal amount of spending over the following decade. In this instance, rather than accede to President Obama's demand as recently as this spring for a 'clean' debt-limit increase, Congress matched a $2.4 trillion increase with at least $2.4 trillion in spending savings over the decade. ... At a minimum, lawmakers should commit to making the 'dollar-for-dollar' rule a permanent debt-limit policy. Using Congressional Budget Office data, I have calculated that if we apply this every time we reach the debt limit over the next 10 years, we will balance the budget by 2021 without raising tax rates over current rates."

Mitch McConnell agrees: On Monday, he told Larry Kudlow, "What we have done, Larry, also is set a new template. In the future, any president, this one or another one, when they request us to raise the debt ceiling, it will not be clean anymore. This is just the first step. This, we anticipate, will take us into 2013. Whoever the new president is, is probably going to be asking us to raise the debt ceiling again. Then we will go through the process again."

Synth interlude: Washed Out plays "Eyes Be Closed" live.

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Still to come: The European debt crisis is spreading; health care lobbyists are already gearing up to resist Supercommittee's cuts; Pell Grants have been spared; David Vitter is holding up an Interior nominee in order to protect offshore drilling; and tweens explain the debt ceiling negotiations.


The European debt crisis is spreading, reports Anthony Faiola: "Fears mounted Wednesday that Europe’s debt crisis is reaching a critical tipping point, spreading from Greece, Ireland and Portugal to the larger economies of Italy and Spain. ... Investors drove borrowing costs for Italy and Spain to 14-year highs, fueling sharp stock market drops in London, Frankfurt, Paris, Milan and Madrid. Though Italian and Spanish bonds later rebounded, borrowing rates for both nations remained dangerously high, at more than 6 percent — and closing in on the 7 percent threshold that eventually triggered bailout talks with Greece, Ireland and Portugal. Concern on Wednesday focused on Italy, whose sheer size — it is the world’s seventh-largest economy — makes it potentially too big to bail out."

A Senate deal on trade agreements has been reached, reports Tom Barkley: "Senate leaders said Wednesday they had reached a bipartisan agreement to renew funding for trade-related unemployment benefits, likely clearing the way for passage of three delayed free-trade pacts once Congress returns in September. Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) said in a joint statement they had found a 'path forward' for the Senate to take up trade deals with South Korea, Colombia and Panama along with the job-retraining program when Congress returns from a month-long recess. The Obama administration had insisted that a scaled-back version of Trade Adjustment Assistance be passed along with the free-trade agreements."

Grover Norquist is already pushing members for the Supercommittee, reports Erik Wasson: "Norquist said he has already been assured by 'the right people' that House Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) will not choose anyone willing to give ground on raising taxes, and he is confident enough to leave town on Wednesday for August vacation. Norquist said he would like Boehner to name House Budget Committee Chairman Paul Ryan (R-Wis.), House Ways and Means Committee Chairman Dave Camp (R-Mich.) and House Energy and Commerce Committee Chairman Fred Upton (R-Mich.). ... He said he would like to see Sens. Orrin Hatch (R-Utah) and Jeff Sessions (R-Ala.) appointed. ... Norquist does not want to see former Gang of Six Sens. Tom Coburn (R-Okla.) or Saxby Chambliss (R-Ga.) on board."

Health care and finance are keeping the rest of the economy from prospering, writes David Wessel: "Two big sectors of the U.S. economy have been on steroids: finance and health care. If anything is crowding out more productive activities, it's them, as [Paul] Romer argued in a recent National Academy of Sciences lecture. The bloated financial sector — all those brains lured by big bucks who might otherwise have been employed in science, software, engineering or other fields — has harmed the U.S. economy more than any of our post-World War II communist adversaries did. The American health system costs more per person than any other, but isn't delivering the world's healthiest people. The U.S. isn't getting its money's worth from either sector. Why have they grown so big? Mr. Romer has a theory: Profit-seeking players in finance and health care have captured Congress."

Supercommittee could use a better way of picking members, writes Keith Hennessey: "I can think of two other structures for a Joint Committee that could have been written into law and would have a much greater chance of reaching a solution. ... A center-out structure: Speaker Boehner and Leaders Pelosi, Reid, and McConnell each get 4 Members (of the House or Senate) for a total of 16 on the Committee; Two of each leader’s selections must be from the other party; you need a majority (9 of 16) to make recommendations. ... A gamble structure: Speaker Boehner and Leaders Pelosi, Reid, and McConnell each get 4 Members of their choosing; any subset of [4? 5? 6?] or more members can make a recommendation as long as CBO certifies it meets the Committee’s deficit reduction goal. ... In February 2013 the next President chooses which of these recommendation takes effect."

We need to extend the payroll tax cut, writes Robert Frank: "Ostensible deficit hawks say that bringing deficits under control will restore business confidence and lead to new hiring. That's nonsense. Businesses haven't been hiring because their current employees can already produce more more than people are willing to buy. Letting the partial payroll tax expire will reduce consumer demand still further, provoking still further layoffs. As I argued in an earlier post, what the economy needs is not an elimination of the partial payroll tax holiday, but rather a complete suspension of the employee portion of the tax through the end of next year. Bringing deficits down is important, but failure to restore full employment as quickly as possible will make the long-run deficit problem larger, not smaller."

Mouths of babes interlude: A 10- and 11-year-old explain the debt ceiling negotiations.

Health Care

Health care lobbyists are gearing up to fight Supercommittee cuts, reports Dan Eggen: "Health-care and defense lobbyists are quickly gearing up for a major lobbying and public relations campaign in response to this week’s debt-limit deal, which could force hundreds of billions of dollars in cuts for two of Washington’s most powerful industries. ... 'It will be a full-court press to work with the committee to make our views known,' said Richard Pollack, executive vice president of the American Hospital Association, whose members would lose an estimated $50 billion a year in Medicare payments under the trigger scenario. 'Our hospitals are in every congressional district in the country. Our patients are Republicans and Democrats. We are very concerned about where this is going to go.' "

There are a number of good Medicare cuts the Supercommittee should consider, writes Austin Frakt: "Competitive bidding, also known as competitive pricing. This idea really puts the market to work to buy Medicare benefits for the lowest possible price on a market-by-market basis. ... Reference pricing. This idea came to me via David Leonhardt and Peter Orszag. ... The basic idea is that Medicare should only spend an amount on therapy for a condition equal to the lowest cost, effective one (that’s the 'reference price'). If individuals want more costly therapies that are no more effective, they should pay the difference out of pocket. ... Support comparative effectiveness research so we can learn more about which therapies are most effective. There is too much we don’t know and it is costing us. ... Support the IPAB. Isn’t it obvious by now that Congress itself can’t control Medicare costs?"

Domestic Policy

Pell Grants have been spared from cuts, reports Laura Meckler: "One federal program emerged with more money in the deficit-reduction deal signed into law this week: Pell grants, which help low-income students pay for college. The White House and its allies cited the increase when they urged Democrats to vote for the broader legislation, which was almost all about cutting government spending. The final deal 'protects Pell grants from deep near-term cuts,' Sen. Kent Conrad (D., N.D.) said Monday on the Senate floor. 'I think most of us understand how important Pell grants are to providing opportunities to young, talented people all across America to improve themselves through higher education.' It was a rare bright spot for a White House that pushed unsuccessfully for a variety of other provisions."

The Pentagon is already resisting potential defense cuts, reports Greg Jaffe: "A senior Pentagon official warned Wednesday that the military would be forced to furlough or lay off thousands of employees if it is required to cut an additional $600 billion from the defense budget. The $600 billion in new cuts would only kick in if a bipartisan congressional panel, to be named this month, cannot reach agreement on $1.2 trillion in budget savings over the next decade. ... Senior Pentagon officials walked a fine line Wednesday in raising alarms about the possibility of large cuts to the defense budget and at the same time casting the big cuts and possible layoffs as virtually unthinkable. ... The Pentagon briefing came on the same day that Defense Secretary Leon E. Panetta sent a letter to service members and other Pentagon employees in which he said that major cuts to the defense budget would be 'unacceptable.'"

The Senate needs to get serious about confirming judicial nominees, write Andrew Blotsky and Doug Kendall: "There have been at least 80 vacancies on the federal courts for the past 760 straight days and counting, according to a recent Constitutional Accountability Center study. At the same time, only 35 new permanent judgeships have been authorized by Congress in the past 20 years — even as the overall federal caseload has expanded by fully a third. The third branch is deteriorating largely because of unprecedented Republican obstruction. Senate Republicans refuse to agree to votes for well-qualified nominees, who enjoy the unanimous support of their Republican and Democratic colleagues on the Senate Judiciary Committee. Today, 16 such nominees are waiting for a vote by the Senate, with four more qualified nominees approved by the Judiciary Committee."

Adorable animals with irrational fears interlude: A shih tzu hesitates about jumping down three steps.


Sen. David Vitter is holding an Interior official's nomination hostage to protect offshore drilling, reports Andrew Restuccia: "Sen. David Vitter (R-La.) said Wednesday he will block the nomination of a key Interior Department official until the Obama administration extends the life of Gulf of Mexico oil and gas leases by one year. “If these leases are allowed to expire, they will revert to the federal government, killing jobs and cutting off potential revenue from exploration and production,' Vitter said in a statement. 'The U.S. economy will greatly benefit by allowing the offshore energy industry to get to work and stay working.' Vitter said he’ll block the nomination of Rebecca Wodder to be Interior’s assistant secretary for fish and wildlife and parks until the department 'extends hundreds of Gulf of Mexico drilling leases that are set to expire this year.' "

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.