Where is the US economy headed?

June 02, 2011 1:30 PM
Obama emphasizes investments in GOP talks

Congressional Republicans have been willing to dish on what they told President Obama during yesterday’s meeting at the White House, but we haven’t heard too much about what the president said in response.

I probably shouldn’t read too much into it, but I found this quote pretty interesting.

“The discussion really focused on the philosophical difference on whether Washington should continue to pump money into the economy or should we provide an incentive for entrepreneurs and small businesses to grow,” said Eric Cantor, the majority leader. “The president talked about a need for us to continue to quote-unquote invest from Washington’s standpoint, and for a lot of us that’s code for more Washington spending, something that we can’t afford right now.”

Now, in general, it’s very difficult to take Cantor’s general approach to economic policy seriously. The fact that he considers public investments to be “code” for spending, and spending is, you know, bad, is a reminder that Cantor isn’t especially bright.

But what I liked about his comments is that it suggests the president is still thinking along the right lines.

Indeed, assuming Cantor offered a reasonably accurate assessment of the discussion, I’m actually pretty encouraged by Obama’s message. As the Majority Leader sees it, the president still wants to pump money into the economy and invest in job creation. Republicans, in their infinite wisdom, think this is a terrible idea — why people don’t just laugh in their face when Republicans talk about economic policy is a mystery to me — but my concern has been the president has forgotten about growth and jobs altogether.

According to what he appears to have told Republicans in private, Obama still wants to “quote-unquote invest” — as well he should.

I agree with Cantor on one thing: there is a “philosophical difference.” But to my mind, that’s all the more reason to have a grand public debate that’s long overdue. The president can make the case that the nation needs to focus on job creation, not long-term debt reduction, and the way to bring down the unemployment rate is to invest in areas like infrastructure, energy, and education.

Then Republicans can explain why they believe unemployment will go down after they lay off thousands of public sector workers, and why we’ll be better off after the GOP takes money out of the economy.

For all the talk in the media about tactics and strategies, we rarely hear a meaningful discussion about why Republicans believe what they believe. Sometimes, on Sunday mornings, I’m tempted to offer David Gregory $50 to ask one of his many GOP guests, “Why, exactly, do you think austerity measures will create a stronger economy? Can you explain this in any depth at all? Why do you fear inflation that doesn’t appear to exist? When you talk about the government ‘crowding out’ the private sector, do you even know what that means?”

We have a weak economy and two competing approaches to make it better. Let’s have the damn debate.

The treasury secretary, Timothy F. Geithner, met on Capitol Hill with House freshmen, including Republicans who have suggested that they see little or no risk in a showdown over the debt limit. Citing the Moody’s statement, Mr. Geithner urged them to support raising it or risk an economic crisis.

“We didn’t create this mess,” one Republican told Mr. Geithner, according to a person in the room.

Independent analyses have shown that more than half of the $14.3 trillion debt is from policies enacted during the past decade when Republicans controlled both the White House and Congress, and much of the rest from lost revenues and stimulus spending and tax cuts since Mr. Obama took office at the height of the financial crisis and recession.

(I)f we measured inflation with the same metrics that were in use when Jimmy Carter was in office the inflation rate would be around 10%.

(I)f we measured inflation with the same metrics that were in use when Jimmy Carter was in office the inflation rate would be around 10%.