President Obama was in North Carolina yesterday, touring a fast-growing manufacturer of clean energy lighting, and convening a meeting of his Council on Jobs and Competitiveness. Of particular interest, though, were the president’s comments about ongoing negotiations with Congress over debt reduction.
“One thing I do think is important is we are keeping our eye on the need to accelerate the recovery as part of the overall package that we agree to,” Obama said. “I’ve long believed that coming out of as bad of a recession as we’ve been in it’s important for us to focus on what the real drivers are of our debt and deficit problems. And that’s not the day-to-day spending. It’s the structural problems that we’ve had between sending too much money out and not bringing enough money in.”
The president went on to note that the discussion with GOP leaders “gives us a little bit of room to continue to do some smart things like the payroll tax cut that we initiated in December while still keeping our eye on the ball in terms of the long term.”
Jonathan Cohn explained why this is encouraging.
This isn’t the first time in recent weeks or months the president said he wanted to strengthen the economy…. But, unless I’m mistaken, this is Obama’s most explicit statement about extending the payroll tax cut and, more important, about including some sort of economic booster as part of the debt ceiling talks. (It’s not been a part of the discussion so far, according to a Democratic source familiar with the discussions.) Also, Obama did this during a series of events designed to focus attention on the economy. The occasion for his North Carolina visit is a visit to a high-tech factory, where he’s also meeting with an advisory board of CEOs and local small business owners.
If I’m right — and, again, maybe I’m missing something — then we may finally be starting a discussion of how to balance short-term measures to bolster growth with long-term efforts to reduce deficits.
I heard Obama’s comments the same way, and I can only hope the talks continue to move forward with these priorities in mind.
Indeed, just this morning, Macroeconomic Advisers, one of major firms providing economic modeling and forecasting, released its latest projection for quarterly economic growth.
As of early May, things looked quite good. Macroeconomic Advisers projected that the U.S. economy was on track to show 3.7% growth in the second quarter (covering April, May, and June), which would be quite good. Soon after, Macroeconomic Advisers lowered that projection to 3.5%, Then 3.2%. Then 2.8%.
As of this morning, it’s 2.1%, which would barely be an improvement on the first quarter’s anemic 1.9%.
To even consider taking money out of the economy right now to focus on debt reduction is insanity.