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How Obama and the Dems Can Get Us Out of the Huge Economic Hole We're in

There's a lot Obama can do to fix the economy: direct public hiring, local aid, invest in energy infrastructure and much more.

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These statements are true but largely irrelevant... As dramatic as the reforms have been, they have not been sufficient to the crisis. And, at the end of the day, what matters is jobs and the economy. House Minority leader John Boehner's response to Obama's argument is simply "Where are the jobs?" Many Americans may think the real choice is between those advocating the policies that got us into the mess and those advocating policies that have failed to get us out.

George W. Bush survived a jobless midterm, but only because of 9/11. In 1994, the economy was actually beginning to generate jobs, but Clinton and Democrats were punished, and the Gingrich Congress was elected. The last president to survive a bad economy in an off-year, first term election was Ronald Reagan. He cut taxes, ran up military spending and exploded the deficit. Despite a deep recession, Reagan got Republicans to unite on a message of "stay the course." He pounded relentlessly from the first day of his administration on the failure of liberalism, on government as the "problem, not the solution," blaming Democrats constantly for the downturn. Democrats made gains, but Reagan survived to go on to re-election.

Obama's message parallels Reagan's. We've begun to create jobs, stay with the policies that "are getting us out of the mess," rather than going back to those "that got us into the mess."

That might work if the economy continues to show ever greater signs of life. But this economy is in real trouble -- and even the slow growth we've had is threatened by the premature turn towards deficit reduction. The IMF estimates that the tightening in the public budget will equal 4.6% of GDP over 2009-2011. States and localities are enacting brutal cuts in the coming months. Growing trade deficits will subtract another 1% of GDP at least. We may not descend into a new recession, but it's hard to see what generates jobs and growth to make up for the fiscal tightening already underway.

The White House and Senate Democrats seem intent on continuing to push a multifaceted reform agenda. On tap is the START Treaty, comprehensive energy legislation, the war supplemental, unemployment insurance extension, the Kagan confirmation to Supreme Court, possibly immigration reform, and more.

Some of this is unavoidable, but the White House would be better advised to focus as much as possible on jobs, even at the risk of aggravating liberals and constituency groups. The president needs to speak directly and repeatedly on where we are, explaining the reality that while the recovery act did stop the freefall and generated millions of jobs, the crisis was far worse than predicted. He should be calling for more action to create jobs. Raise the ante with a bold package of measures -- including direct public hiring, aid to states and localities, use the money paid back by the banks to give small business access to lower interest loans, call for a an infrastructure bank to mobilize private capital to rebuild America. Shelve the free trade agreements and challenge China and Germany, stating flatly that the US will not allow a return to the old global imbalances. Call on states and localities to pass and enforce domestic content legislation to ensure that taxpayers dollars create jobs here rather than abroad. Push the elements in the energy bill that generate jobs -- from retrofitting public buildings to permanent tax credits for renewable energy sources. Push passage of jobs creating transport and infrastructure appropriations.

The conservative noise machine already argues that the president, having run up record deficits with a failed stimulus program, now wants more of the same. Virtually all of these measures will be opposed -- as everything else has been -- by Republicans. Little of it will survive the inevitable Republican filibuster in the Senate.

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