Economy / Politics

Tax and entitlement reform overshadowed by credit-taking, blame games, and job report

Following a jobs report released this morning showing the unemployment rate dropped from 8.5 to 8.3 percent last month, the President emphasized his plan to keep the economy growing at a fire station in Arlington, Virginia.

“The economy is growing stronger. The recovery is speeding up. And we’ve got to do everything in our power to keep it going,” he said.

Alan Krueger, Chairman of the President’s Council of Economic Advisors, stuck to this theme in a blog post this morning. “We need to extend the payroll tax cut and continue to provide emergency unemployment benefits through the end of this year, and take the additional steps that President Obama proposed in his State of the Union address to create an economy built to last,” he wrote.

The media has already begun widespread speculation on what the decreasing trend of unemployment means for the President’s chances of reelection and for Republicans in general, having attacked the President aggressively on the failures of his economic policies.

While the latest numbers are positive, President Obama and Krueger have been quick not to assert that this trend will last.

“Now these numbers will go up and down in the coming months,” the President said this morning.

“The monthly employment and unemployment numbers can be volatile, and employment estimates can be subject to substantial revision…it is important not to read too much into any one monthly report,” Krueger added as a disclaimer at the end of his post.

The President and his administration have put in place a Plan B. If the economy continues to improve before November, the President will take credit. But if the economy takes a turn for the worse, he has a number of ways in which he can divert responsibility.

The President warned Congress today, “Do not slow down the recovery we are on. Don’t muck it up.”

Let the long and arduous blame game commence.

Reports today from Congress highlight squabbling in the House over the payroll tax cut extension—“what’s the holdup,” “how will we pay for it,” and the like.

In light of the haggling, members of Congress seem to have already forgotten that within the last two weeks a number of congressional committees have heard testimony after testimony on the importance of putting a plan in place now on entitlement or tax reform for the long-term economic health of the United States.

The measures of these fundamental reforms do not have to be felt within the next couple years. Instead, they will help reassure markets that American lawmakers are dedicated to putting America on the path of fiscal sustainability in the long term. Though the current state of U.S. public debt is both massive and undesirable, the ultimate crisis comes further down the line.

To Congress: listen to the advice you have been given. Bernanke, Elmendorf, and numerous experts have warned Congress to be careful not to dislodge the economy in the short term, but to also put a plan in place for the future, a plan that reigns in burgeoning entitlement spending and fixes a broken tax code. Failure to do so will be the collective fault of all our elected officials. There is plenty of blame to go around. This is a problem that cannot be put off any longer.

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