Thursday, November 13, 2008

Obama Must Ignore the Deficit

President Elect Obama faces a daunting economic task which is complicated by a massive federal deficit. The conventional thinking is that he must find a way to revitalize a near dead economy without increasing the deficit. My suggestion is that he ignore the conventional thinking and concentrate his efforts solely on revitalizing the economy. The federal deficit is a long term problem which will be of little consequence if the economy falls apart in the short term. A ship with a gaping hole below the waterline must fix the immediate problem before plotting a new course to avoid future icebergs.

Targeting working class Americans with tax cuts, freezing home foreclosures, and infusing capitol into infrastructure projects will undoubtedly increase the deficit. However, these actions will improve consumer confidence and create badly needed jobs. Once the economy begins to turn the corner President Obama can slowly return the government to fiscal responsibility and begin to work on the social reform agenda which helped propell him to power. Bill Clinton's first major economic package passed without a single Republican congressional vote. Passing an economic package which increases the deficit may not be easy, but this is not the time for easy politics. An expensive economic stimulus package may create a target rich environment for his enemies in the short term, but the alternative is to play the traditional political game as expected, and fail.

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