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Clearly, theres a need for the federal government to pivot from deficit spending to create jobs, to deficit reduction to contain the national debt. But when?
With the public debt due to reach 100 percent of gross domestic product next year and heading toward record levels Congress is making the pivot now, much to the distress of liberal economists and the Obama administration.
With unemployment still at 9.7 percent and with growth projected to be no more than 3 percent to 4 percent in coming years, the administration desperately wants Congress to approve more stimulus spending.
But Congress seemingly wont. And liberal economists such as Paul Krugman and White House economic adviser Christina Romer are casting parallels to Franklin D. Roosevelts 1937 pivot from expansionary policy to budget balancing, which deepened the Great Depression.
President Barack Obamas problem is that he cant convince the public that his $800 billion 2009 stimulus program worked to produce jobs and that more stimulation will help in the short run.
And hes also not convinced practically anybody that he has a serious long-term plan to get deficits and debt under control.
According to a new Pew poll, by 60 percent to 33 percent, U.S. adults think that last years stimulus has not helped the job situation.
By 54 percent to 38 percent, the public doesnt think that the Bush administrations Troubled Asset Relief Program worked either, despite almost unanimous support from economists across the political spectrum.
Theres massive confusion among voters as to the best next steps to improve the economy. Large majorities think that all ideas on the table additional spending on public works, cutting taxes on business, budget cuts to reduce the deficit, cutting income taxes, and aiding state and local governments would help at least a little.
But fewer than 40 percent of voters think any of the solutions would help a lot. And not even a majority of Democrats strongly supports public works or aid to states.
Obama, Vice President Joseph Biden and other White House aides are trying hard to convince the public and Congress that spending now and saving later is the way to go, but they are not buying it.
Biden, in a White House briefing last week, declared that the fact is, the Recovery Act [stimulus package] is working. Weve gone from hemorrhaging over 700,000 jobs a month the first several months we got here ... to adding several hundred thousand jobs a month the last several months.
Weve gone from a GDP that was shrinking at 6.4 percent the first quarter we came into office to a GDP that grew 3 percent last quarter and averaged 4 percent the last three quarters.
Spending $620 billion of $787 billion in stimulus money so far has saved or created 2.3 million to 2.8 million jobs, Biden asserted.