Thursday, August 18, 2011

Obama Play Book

Ezra Klein is right to state that 'he is least interested in yet one more plan from President Obama for jobs'. What he is interested to know is what 'stakes' President Obama is ready to put down for any such plan. Clearly without defending any such bold plans, it ain't going anywhere and Obama descend in American Politics will continue.

We know that to a degree, any of these plans can address our core issues. The question is whether President Obama and Democrats are ready to 'wage the political war' for the same. So far the first instinct by Obama has been 'put the tail between legs and run' all under the guise of claiming 'otherwise things would be very bad'. Meaning Obama is saying if 'he fights for rights of common Americans' things are going to go worse because the other side is 'crazy'! Ok, we hear that.

However, now that the threat of default is gone and downgrade has anyways occurred; contention is can we expect Democrats to insist a 'serious job creation' plan as a part of Super Committee proposal? If GOP opposes that, not only Obama and Democrats should go to American Public pointing out who is withholding America's Recovery; they should be fully prepared for 'automatic cuts' to start applying. GOP would blame Democrats for moving goal posts from the original agreement as it did not talk about jobs. But why can't Democrats retort that - yes as circumstances change and Americans continue to face head winds of painful employment; they want to respond to these changed circumstances. Is that so bad?

GOP would also portray jobs program as the same 'tried and failed Obama Stimulus'. Obama needs to reply - but otherwise also we have been trying GOP austerity program for a while with no results. Besides proposed new job programs does not have to be deficit funded, it can be funded by new revenue. And when GOP says that this 'job-killing' new revenue is not acceptable; point them to Bush years where there was no such 'job-killing' revenue but neither it gave lasting jobs nor it avoided deficits.

Question is how bad are these automatic cuts in absence of a deal from Super Committee. My suspicion was that it would not be that bad as more than half of cuts are coming from bloated Defense and Security budgets and as far as Medicare goes, it is about 'provider fee reduction'. This much is vindicated by Cohn. If we get further credible numbers from CBO or other equivalent agency about realistic impact of these cuts on 'jobs' and if that impact is manageable; then you have a clear workable 'play book' for Obama and Democrats. It will be also a litmus test for Obama whether he is willing to do something concrete about our problems, or is simply interested in letting steam go. So far he has failed miserably.

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