Mike Gerson has a pretty smart column in the Washington Post today about the President’s political dilemma, given the current economic doldrums. Gerson starts with the coincidence of Obama’s visit to a Jeep plant in Toledo, Ohio, with the release of the latest dismal statistics:
Before Toledo, Obama’s main task was to take credit for a slow recovery. After Toledo, his main task is to explain and confront a stalled economy. The adjustment has not been easy.
A slow recovery requires a message of patience. A stalled economy demands an impression of action.
But action is near-impossible right now, as Gerson points out. The possibility of goosing the economy via government stimulus is off the table, given the current deficit cutting mania; and Ben Bernanke, the Federal Reserve chair, has decided not to continue attempting to goose the economy via a looser monetary policy.
Gerson is right that Obama has been trapped into a Republican game–the deficit obsession–that will make it near-impossible for the President to address the issue that the public considers most important right now: jobs and economic growth, as opposed to the deficit. The government’s impact on a bum economy is limited under the best of circumstances, but how does a President affect the economy with his primary weapons under lock and key. One course of action is to sit tight and hope that the June economic numbers were an anomaly on the road to recovery (which is not at all impossible, but far too passive a course for most politicians and the public).
A second possibility would be to propose more tax cuts–especially on payroll taxes, perhaps with some business tax relief mixed in–which would force the Republicans to choose between their two ever-contradictory “principles”: lower taxes and deficit cutting. If a really clever and tempting package, one that would feature a reduced corporate income tax, can be cobbled together, he might even be able to get the Republicans to accept some new “revenues” by closing corporate tax loopholes.
This wouldn’t be very satisfactory to most Democrats–or to people like me, of both parties, who would like to see a real infrastructure investment program that involves more than just repaving highways–but it may be the only way out of the box that the President is in.