The Emperor's (Jobs) Speech

     While we all eagerly await President Obama’s return from Martha’s Vineyard with a new jobs agenda, we can muse about whether he will walk through Door A or Door B.

     Door A: Governing. What would seem to be needed is a long term plan with a short term component, agreeable to both parties.

     The framework could be based on Simpson-Bowles, perhaps enhanced by elements of Paul Ryan’s FY 2012 budget and the recent debt ceiling debate “grand bargain“. That would include restructure of the corporate and individual tax codes; steps to restructure Social Security, Medicare, and Medicaid; and a general tightening of federal spending to get Debt to GDP into the 60 to 70% range.  This is the work of the bipartisan Deficit Reduction Commission, but a strong and specific presidential plan would go a long way.

     Given a long term framework, there are some things that could be done in the short term.  Regulatory relief would seem an easy place to start – eliminating new dust standards for farmers; letting Boeing and other decide where to locate their facilities; getting on with expansion of our energy resources.  He might unlock the free trade agreements which have been negotiated and available from Day 1 – but face union opposition. As part of a total package the Republicans might well agree to a deficit-increasing continuation of unemployment benefits, the partial payroll (Social Security) tax holiday, and more subsidies for mortgage holders.

     Door B: Campaigning. Continue the mode of blaming Bush, the Tea Party, and “bad luck”.

     Much of the media still seems willing to place the blame for the debt limit impasse on the Tea Party’s insistence on not raising taxes rather than the Democrats unwillingness to address entitlements. Ryan’s proposal to reform Medicare remains a good demagogue item which would be lost for 2012 if Obama made any similar concrete proposal. Taxing “the rich” to make them pay their “fair share” is always a good applause line, particularly if you can get Warren Buffet to deliver it – even though such an increase would have a negative impact on job creation and he agreed to the current rates as part of the “continuing budget resolution” debate for FY 2011.

     Part of the problem for Obama is that it is probably too late for any impact on the economy prior to the 2012 election unless it is a matter of passing out money for specific short term job creation – and the Republicans won’t allow that for ideological and political reasons.  With the Congressional Budget Office projecting unemployment well above 8% through 2012 he will be aiming at the optics of an improving situation to get above his current Carter-esque approval rating. And, of course, if it is somebody else’s fault – maybe the Big Guy who’s sending earthquakes and hurricanes.

     But the larger part of his problem is that he doesn’t have a clue. Most of his economic advisors are gone; he still doesn’t have any business people in his inner circle; and he leans in public on people likeJeff Immelt of GE which pays no taxes (due largely to “clean energy” credits for wind turbines) and apparently intends to move its medical devices headquarters from Wisconsin to China.  Small business – forget it.

    A prediction: Obama will will stay with Door B; Mitt Romney will offer a Door A option.  Game on.  


      In place of a video, this week’s “bonus” is an excellent Stratfor article about Libya’s future challenges.  Absent from the discussion of internal divisions and external forces – Egypt; Europeans; China – is any mention of the United States.