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Obama Struggles To Reach Debt Deal, Create Jobs

Mon, 07/11/2011 - 4:35am

Ben Feller, AP White House Correspondent

WASHINGTON (AP) — Immersed in an intense struggle to cut the national debt, President Barack Obama faces a dilemma that will stay with him even if he succeeds in striking a grand deal with Congress: convincing Americans that the entire effort will do anything to create desperately needed jobs.

Obama ties deficit reduction to jobs, on the basis that trying to balance the nation's books will promote economic stability and give businesses more confidence to hire. But that's a tough sell to the millions of Americans out of work right now. And the communications problem just got harder.

The latest snapshot of the economy, out Friday, was a body blow that showed employers added a meager 18,000 jobs in June. The leaders of the country, meanwhile, are consumed with negotiating a major debt-reduction deal built upon cutting spending and raising taxes. It is not directly aimed at boosting jobs.

Obama's challenge is to link all this in meaningful terms and to get faster results. At stake are the country's economic recovery and his re-election chances.

The debt is the urgent problem for Obama and a divided Congress because they have no choice. Reaching a deal has become the key to winning Republican support for raising the nation's debt limit, a politically noxious vote that Congress must take by Aug. 2 to keep the nation from risking default for the first time ever.

"There's no question that this is a complex, almost impenetrable issue," said David Axelrod, a longtime Obama adviser and now a senior strategist to the president's re-election campaign. "It's not just the issue of the potential default, but it's the larger issue of what he's trying to get at, the opportunity of trying to do something big about the deficits and the debt. Big things are at stake, but they're hard to penetrate, so the process of dealing with them is painstaking."

Republicans, too, face the challenge of explaining and defending how cutting debt will create jobs in the short term. They won control of the House last year in large part because of voter anxiety about government spending and jobs. But it is Obama who bears the largest burden, as any president does.

In addressing the dismal jobs report, Obama made plain he knows what the country is thinking.

"The debate here in Washington's been dominated by issues of debt limit," Obama said. "But what matters most to Americans, and what matters to me most as president in the wake of the worst downturn in our lifetimes, is getting our economy on a sounder footing so the American people can have the security they deserve."

As an imperative unto itself, deficit reduction is embraced by all parties as vital for stabilizing the nation and shrinking the debt passed on to the next generations. And a failure to extend the nation's borrowing limit could cause a kind of enormous economic breakdown that would only worsen the employment picture.

Now under deadline pressure, Obama and congressional leaders of both parties were to hold a rare weekend negotiation session on Sunday on a debt-cutting package that remains far from certain.

They had been eyeing a deal to cut the deficit by roughly $4 trillion over a decade, but House Speaker John Boehner announced Saturday night he'd seek a smaller agreement of about $2 trillion because "the White House will not pursue a bigger debt reduction agreement without tax hikes."

Yet it is joblessness itself that cuts to the heart of the American struggle. Obama said people "pour their guts out" when they write him letters about it.

So he is pushing jobs ideas distinct from the debt talks. The president is prodding Congress to pass three pending trade deals, create construction jobs by repairing the nation's infrastructure, extend a payroll tax cut that could keep money in people's pockets, and make it easier for entrepreneurs to get patents.

But the debt discussion is taking up Washington's bandwidth. And not everyone is so sure it will help speed job creation.

"Washington seems tone deaf," said Scott Paul, executive director of the Alliance for American Manufacturing, a sector of the economy Obama has been actively promoting. "The metric for President Obama and congressional leaders must now be the number of jobs we create, rather than the amount of deficit reduction we see."

The White House says the priority is both the deficit and jobs and that people understand that.

A Pew Research Center poll in June found that more people favored cutting the deficit than spending to help the recovery. That mood varied widely, though, by political constituency. Independents, who will be key to Obama's bid for a second term, favored deficit cutting over economic spending by 54 percent to 39 percent.

"The key is making sure that you're communicating the importance to the future of the country of dealing with our deficit, without slipping into inside-the-Beltway lingo," said Dan Pfeiffer, Obama's communications director. "If communicated incorrectly, it can feel removed from day-to-day life. On the other hand, there's an element of common sense to why this is important that I think people in the country get that sometimes eludes folks in this town."

The debt limit remains an obscurity to people. An Associated Press-GfK poll in June found Americans divided on raising it or not.

Obama has tried to make the case that calamity awaits without action by Congress.

"I want everybody to understand that this is a jobs issue," he pleaded in a news conference last week. "This is not an abstraction."

The struggle has drawn Obama again into a reality of his job: time-eating negotiations with Congress on matters that resonate little with voters. After a bruising midterm election season last year, he conceded that meeting his White House responsibilities cost him some connection with the people.

The president has since made a point to get out of town more regularly. Not this month, though. He is expected to keep meeting with congressional leaders at the White House until a deal can be reached, just as he did, day after day and night after night, earlier this year on a budget deal that prevented a government shutdown.

Irrespective of the jobs element, Obama stands to gain if he emerges with a package that genuinely shrinks the debt in a way most Americans think is fair.

"What's fundamentally at stake here are economic issues. And barring any surprises, that's what the election will be about," said Robert Shapiro, a Columbia University professor who studies public opinion. "Getting out in front is something that would play well publicly, if things fare well. Taking the lead on the economy is probably a very good use of his time."

 

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