President Barack Obama will address Congress and the country regarding his plans for job creation on September 8th. What he talks about will be scrutinized very closely, as this is seen as his last attempt to spur job creation before his focus will turn towards his 2012 reelection bid.
To generate jobs in the United States, President Obama must endorse a mixture of long-term spending cuts and short-term spending. President Obama must present a plan that makes compromises but still stands firmly on the principles of Keynesian economics.
The immediate impact of the speech will be felt in consumer confidence. President Obama's speech must instill confidence amongst the public that things will start to get better, and soon. With consumer confidence at a two-year low, based largely on job insecurity, President Obama's speech must show that the government is committed to creating jobs and encouraging private sector hirings.
Yet, such a proposal must come with a bipartisan approach, as any plan would need approval from a Republican-controlled House. Further, showing the country that Democrats and Republicans can work together for the betterment of our country will help inspire confidence. Higher consumer spending greatly helps the U.S. economy, which is largely service-based.
To be more specific, there are a few things that President Obama should propose:
Most importantly, his speech must promise more infrastructure spending. Infrastructure spending has long been a staple of Democratic stimulus packages. And it has been proven that this approach has worked. Infrastructure spending helped bring the United States out of the Great Depression. Yet, not nearly enough was spent, so the U.S. saw a double dip recession in the late 1930's.
We are facing something eerily similar today. The previous stimulus package helped curtail the recession, but it was not enough.
We need new infrastructure spending now. Yet instead of traditional means of infrastructure spending, President Obama should propose a new area for spending: broadband access. The country currently has only the 25th-fastest internet speed in the world. Having access to high-speed internet is vital to our future. It is necessary for job growth in the future, and to help keep the U.S. at the forefront of technological development.
Infrastructure spending will help create new jobs in the coming years, but without a long-term plan of debt control, our economy will face problems. President Obama must make long-term agreements that will help curb our huge spending deficit, but now is not the time to do that.
Any long-term plan must focus on ways to cut down our debt, as debt will eventually hurt our economy. Yet these cuts need to be met reasonably with revenue increases. The proposed levels are currently three to one, cutting to revenue, but these numbers could easily approach the six to one ratio, a level where most people would be reasonably satisfied.
Budget deficits help the country recoverfrom recessions when spending occurs in the right areas. President Obama must strike a delicate balance in his new approach on jobs, but it is one that can be found when focusing on short-term spending and long-term cutting.
Photo Credit: Timothy Volmer