President Needs Laser Beam Focus on Economy

Now that the "official" unemployment rate has exceeded the 10% threshold, and the bloom appears to be off the Obama rose, methinks it's time for the President to become more fully engaged in job creation.

He has an ambitious agenda, including the health care reform bills now before Congress, but before he moves on another massive undertaking like passing Cap and Trade, he needs to get re-engaged with the economy.

To do that, he'll need to recalibrate his budget plans for the next decade, which include tax increases and accounting changes that are designed to raise more money for the government, but could well undermine his ability to promote a healthier, job-creating economy.

A couple of weeks back, Christina Romer, one of the President's own economic advisors, said the stimulus plan has already done "all it's going to do" to boost the economy. It was curious statement, given that most of the stimulus money will be spent next year, but I suspect it has something to do with the administration learning a few lessons about the expectations game. As any man approaching his wedding night knows, it's always better to under promise and over deliver.

While a health care bill has passed the House of Representatives, its prospects in the Senate are anyone's guess. But no matter what the outcome of health care reform, the President needs to get the message sent by elections in Virginia and New Jersey. That message has more to do with the economy than with health care because people who have lost jobs want more than an extension of unemployment insurance, and people who still have jobs wonder if they'll be next.

Here's a suggestion, Mr. President. I know you're frustrated with the national government putting off key challenges, but you can only take on things like climate change if economic issues are first taken care of. The economy needs more than the sugar high (and to be fair, the long-term investments) represented by the stimulus bill; it needs the sustained, long-term growth that across-the-board tax relief can provide — paycheck after paycheck.

If you want government to be flush with cash, the economy comes first. And if you really want to soak the rich, make them richer by lowering their tax rates. As Presidents Kennedy and Reagan proved, nothing stimulates the economy quite like allowing the American people, rich and middle class alike, to keep more of their own money to invest, start businesses, and engage in the level of consumer spending that gives businesses the confidence to hire.

I know the rich don't really deserve a tax rate cut, especially given the recent behavior of corporate crooks and the likes of Bernie Madoff, who made off with a lot of people's life savings. But when they become wealthier, as they typically do in an expanding economy fueled by tax rate cuts, you get more tax money out of them even at those lower rates.

Use them to your advantage.

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