Country needs a grand bargain even more than a jobs plan

Guest Editorial
President Barack Obama’s jobs plan contains some admirable pieces, including tax cuts and infrastructure spending that have the possibility to help the economy.

On a huge question, paying for the $447 billion proposal, the president put off details until later this month. That’s when the president will outline debt reduction proposals to the 12-member “supercommittee” charged with carving $1.2 trillion from the federal budget over the next decade. Because of that glaring omission, the jury is still out on the Obama plan. The two crucial pieces — what the government would spend and how that spending would would be paid for — have to be considered together.

The proposal points up the nation’s current dilemma: Any pricey government solution would just dig more deeply into a growing government problem, the swelling national debt.

Some economists complain Mr. Obama’s proposal isn’t big enough and that it’s focused on the wrong things. The last stimulus, which cost nearly twice as much as this one, kept things from getting worse, saving or creating between 1.4 million and 3.6 million jobs, according to the Congressional Budget Office.

The 2009 stimulus, however, failed to jump-start an economic recovery in the private sector, where unemployment remains high and not improving. Wary and depleted consumers are saving more. Gun-shy businesses are sitting on cash reserves.

Last week’s stock market plunge that followed the president’s address to Congress was in part a reaction to Europe’s continuing economic trouble. However, it was clear President Obama had done nothing in his speech to allay fears closer to home.

The market reaction seemed less a response to the substance of his plan than a well-founded skepticism about the political culture of Washington.

The debt ceiling stand-off heightened public fears that the nation’s leaders are incapable of any kind of Grand Bargain. That bargain would involve significant reductions in spending — including a needed overhaul of costly entitlement programs — along with revenue increases, whether through tax hikes or through eliminating tax loopholes.

The largest single piece of Obama’s plan would cut the Social Security payroll tax in half for 2012. The would put about $1,500 in the pocket of the average family over a year. Another piece would cut taxes for small businesses. The president would put money toward roads, schools, community colleges, police and firefighters, as well as refurbishing vacant and foreclosed homes and businesses.

The payroll tax cut is premised on the idea that consumers would spend the additional money, providing a boost to the economy. It’s just as possible that people will continue to pad savings accounts, just as businesses might, because they are deeply unsettled about the future.

That returns to the nation’s leadership in the White House and Congress: It might be too much to hope as we approach a political year, but what the country needs even more desperately than a new economic plan is political give from both sides.

Partisan agendas aren’t helping create jobs. A little compromise and courage might.