President-elect Obama just announced that he has taken his already bold plan for job creation a step further: instead of seeking to create 2.5 million jobs over the next two years, he now aims to create 3 million. How does he plan to do this?
Biden and Obama responded by pushing for a more ambitious jobs plan, driven by federal investments in health care, education and energy…
Obama’s team and congressional staff over the last week have been scrambling to come up with details of a plan to pump up the droopy economy with $650 billion or more in government spending over the next few years.
Of course, Obama’s move to increase spending in these areas isn’t unexpected. And although it seems likely that Republicans in Congress will oppose such drastic federal spending on new government programs, doing so nonetheless poses a distinct challenge. If Republicans in Congress oppose and possibly defeat such a measure, they must be prepared for the inevitable attack along the lines of: “Your family is hurting because Republicans opposed our plan to create 3 million new jobs and stimulate the economy.”
This sort of attack has the potential to further increase voters’ negative sentiments towards the GOP, and so Republicans must be prepared to aggressively combat it. Winning this battle will come down to having the right message and pushing a sound alternative plan.
I had the opportunity to discuss all of this with Dr. Allan H. Meltzer, a Professor of Political Economy at Carnegie Mellon University and a distinguished economist and expert on monetary policy.
The Republican Message
Dr. Meltzer concedes that the state of the U.S. economy “seems rather severe,” noting that most forecasts estimate that the the unemployment rate will peak at about 8.5%, which is “a bit worse than the average postwar recession.” However, he points out that “capitalism without failure is like religion without sin.” Following this logic, Republicans should argue that despite the cries of impending doom, we should give the free market an opportunity to correct itself – indeed, Meltzer notes that public opinion has already been against government intervention in the form of bailouts. Additionally, Dr. Meltzer raises a crucial argument that should have a prominent role in the Republican message against Obama’s spending plan:
The Obama plan to date concentrates too much on relieving stress in the near term. We have to be wise enough to anticipate that the huge deficits we are building will have to be serviced.
Thomas Sowell also raises some key points that could be integrated into the Republican message:
Too many people who argue that there is a beneficial role for the government to play in the economy glide swiftly from that to the conclusion that the government will in fact confine itself to playing such a role…
Even in the case of the Great Depression of the 1930s, increasing numbers of economists and historians who have looked back at that era have concluded that, on net balance, government intervention prolonged the Great Depression.
An Alternative Plan for Republicans
Dr. Meltzer proposes that an alternative Republican plan could consist of two components. First, since “much of the debt will be held abroad,” he explains that “a sensible policy would prepare to increase productive capacity so that we can increase exports.” Second, instead of increased spending, he suggests that Republicans should advocate “tax reduction to encourage home purchases and capital.”
Specifically, leading economists such as Dr. Meltzer and Clive Crook have observed that the main problem in the U.S. economy is the ongoing housing crisis – and that the government’s efforts to revive the economy have largely ignored this problem. A Republican plan would be wise to suggest free market solutions to this underlying issue. For example, Meltzer has previously advocated that the government “allow [home] buyers to use the value of their down-payment (or some part of it) as a tax deduction” in 2009.
The bottom line is that battles like this will be pivotal as we fight to rebuild our Party. Republicans must ensure that they are able to win these fights – not only in Congress, but also in the minds of voters. By having an effective message and proposing a solid alternative plan, Republicans can seize the day and win both.
Last 5 posts by Aaron Marks
- Onward and Upward: Building a Sustainable Majority - January 22nd, 2010
- Dear Young Voters: This Is What You Get When You Don't Vote - December 1st, 2009
- The Youth Vote and the 2009 Elections - November 6th, 2009
- The Best of the Post-2009 Election Spin - November 5th, 2009
- Introducing NextGenGOP Executive Director James Kane - October 20th, 2009
