Job growth stalled in August, manufacturing activity isn’t faring much better, the demand for liquidity and safety is on the march again, and the trend for U.S. exports may face new headwinds if economic growth in emerging markets suffers, as some analysts predict. What's a politician to do these days? Lean on the tried-and-true policy response, of course.
The latest round of gloom is raising the profile of tax cuts once more as a potential solution. But is this policy tool up to the job this time? President Obama seems to think so. He’s ready to roll out a new round of tax cut proposals in his scheduled speech to Congress this Thursday.
The president "is focusing on cuts targeted at middle-income Americans to spur consumer spending, which accounts for 70 percent of the economy," Bloomberg reports. The article goes on to quote Peter Orszag, former director of Obama’s Office of Management Budget, who reminds that with the unemployment rate stuck at the elevated 9% "the economy desperately needs help." Presumably that's one of the few uncontroversial notions in Washington these days. But how to respond is as tricky as ever.
Weighing the nexus of political reality and economic need, Orszag says that the president “will probably have to lean heavily on tax cuts if it’s going to have a serious chance of being enacted."
