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Spend or Scrimp? Two Sides in White House Debate
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| Contributor | Jason |
| Last Edited | Jason Jul 02, 2010 10:50pm |
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| Category | General |
| Author | Jackie Calmes |
| Media | Newspaper - New York Times |
| News Date | Saturday, July 3, 2010 04:00:00 AM UTC0:0 |
| Description | WASHINGTON — Not since the first years of the Clinton administration has a White House had to debate whether to give precedence to stimulating the economy or reducing budget deficits. Now, as the recovery shows signs of faltering, that debate is playing out within the Obama administration, with a twist compared to the 1990s: the economic and political teams have switched sides.
While President Bill Clinton’s political advisers favored more spending and tax cuts coming out of the recession of the early 1990s and his economic team pushed to start reducing deficits, in President Obama’s circle the opposite is true. Political advisers are channeling the widespread public anger at deficits while the economic team argues that the government should further spur the economy to avert another recession.
In Mr. Clinton’s day, the economic team, asserting that a credible commitment to fiscal responsibility would reassure financial markets and lead to greater long-term growth, won the argument in favor of deficit reduction, helped by moderate Democrats in Congress. These days, the Obama political team has the edge, again in the cause of emphasizing deficit reduction and with an assist from Congressional Democrats nervous about the midterm elections.
Even so, the proponents of additional stimulus got more ammunition on Friday with the government’s release of disappointing jobs numbers for June, confirming that private sector hiring has slowed from earlier this year. The evidence of the shaky recovery underscored the stakes in the continuing debate in the White House and Congress, especially as states and cities are raising taxes and cutting tens of thousands of public employees to balance their budgets, and debt-laden European governments are retreating from stimulating their economies. |
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