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Obama’s deficit plan faces economic realities

President Barack Obama speaks at a fundraiser at Sony Pictures Studios in Culver City, Calif., Thursday, April 21, 2011. (AP Photo/Reed Saxon)

President Barack Obama came to the West Coast looking to sell a long-term plan for reducing the nation’s deficit. But he couldn’t escape the reality that many Americans are still waiting for short-term solutions to their economic problems, from persistent unemployment to the crippled housing market.

Voters in California and Nevada did express both an interest and an understanding about the need for deficit reduction. Yet they made clear that the economic recovery that’s given Washington lawmakers the space to start discussing longer-term fiscal matters still hasn’t fully taken hold in ways that are meaningful to them.

Obama long has said he knows the economic recovery hasn’t come to many parts of the country. But as he shifts into re-election mode, his challenge will be to show the public that he’s still focused on issues like job creation, even as the conversation in Washington changes to how to bring down the nation’s massive debt.

An audience member at Obama’s town hall meeting at Facebook headquarters in Palo Alto, Calif., on aptly summarized how the shift in economic emphasis looks to the public.

“At the beginning of your term you spent a lot of time talking about job creation and the road to economic recovery,” the questioner told the president. “Since then, we’ve seen the conversation shift from that of job creation and economic recovery to that of spending cuts and the deficit.”

“I would love to know your thoughts on how you’re going to balance these two going forward, or even potentially shift the conversation back,” she added.

Obama’s response, both at Facebook and in other appearances pitching his deficit-reduction plan, is that unless lawmakers address the nation’s long-term fiscal health, further short-term economic gains could be difficult to come by.

“If we don’t have a serious plan to tackle the debt and the deficit, that could actually end up being a bigger drag on the economy than anything else,” Obama said.

While the economy has rebounded somewhat since the early days of Obama’s presidency, the national unemployment rate is still 8.8 percent and millions of jobs lost during the recession haven’t come back. A questioner at Obama’s town hall meeting in Reno, Nev., on Thursday said both he and his wife were out of work.

Compounding the economic problems for many Americans is the faltering housing market that left many homeowners owing more on their mortgages than their homes are worth and other prospective homeowners struggling to find the money to buy.

A question submitted for Obama online during the Facebook town hall put the public’s frustration simply: “The housing crisis will not go away.”

Obama didn’t reject that assessment, calling the housing market the “biggest drag” on the economy.

“People who want to move have a great deal of trouble selling, and people who want to buy, as you pointed out, are seeing terms a lot more restrictive,” Obama said.

Tack on rising gasoline prices and it’s no surprise that many Americans are still feeling pinched from all sides. In an Associated Press-GfK poll from March, 90 percent of people said the economy was a top priority.

The same poll found that 76 percent of Americans see budget and deficit issues as extremely important or very important. The poll was conducted before Obama and Rep. Paul Ryan, R-Wis., announced competing plans for bringing down the deficit.

Both parties agree the deficit must be cut, but they differ greatly over how to achieve it. Obama’s plan would cut deficit spending by $4 trillion over 12 years through a combination of spending cuts and tax increases on the wealthy, while House Republicans have passed a plan that would cut nearly $6 trillion from the deficit, in part by overhauling Medicare and Medicare.

Obama and Republicans have accused each other by turn of pitching “radical” plans, and there are few indications of where they’ll find room for compromise.

Copyright © 2011 The Associated Press


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2 thoughts on “Obama’s deficit plan faces economic realities”

  1. Yep, Obama’s shifting to re-election mode with more than a year and a half left in his term. Doesn’t he have a job already? Like, maybe presiding over some thing?

    • As someone recently said, people don’t like him as Preasident, but love him as candidate. Easier to plan than execute… easier to philosophize than govern… much easier to play basketball, golf, and hang out with celebrities on the taxpayers dime.

      BHO – magic candidate… or, as 2 someone’s recent posts – combined – would sum up… President empty suit with Big Hat and no cattle. Fool me once…

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