President Obama’s Plans to Create Jobs and Cut Spending

January 27, 2010

In his first State of the Union address, President Obama recommitted himself to creating jobs, offered a plan to freeze spending to control the mounting deficit, and, in the wake of efforts to establish a Senate commission to reduce the deficit, has promised to create a presidential commission to address and curtail spending. Bill Frenzel, a former Member of Congress, gives mixed reviews to this flurry of ideas and proposals from the president.


“Commissions can’t do everything for the Congress. It would be nice if Congress could do it itself, but the record shows it has a total inability to make fiscal decisions that tend to reduce deficits. So I hope that that will be back. The other question is the President has now said ‘well I supported that, and if you can’t do that Congress, then I will appoint a presidential commission.’ As a purple-hearted veteran of many, many presidential commissions that were failures in every respect, I would think that is not a great idea. I hope that that does not take place. Some people say it is better than nothing; I guess I don’t think so. I think you need to have a commission which commands a vote in the Congress up or down, and presidential commissions simply present reports.”

“I think the freeze is a good idea for the President. At least it begins to hint at some sort of discipline process in our budgeting and appropriations. It is modest. We are talking about a tiny portion of the budget. We are not talking about cutting, we are talking about freezing. So in a way, critics would call it a throw-away, but it is a change over the current style. If the President can make it stick – if he says ‘I am going to veto everything that contradicts my freeze’ – then it will be worthwhile. It will begin to start some discipline in the Congress.

Now the Congress knows it has got a problem. There have been a number of reports and a lot of publicity about the rising debt, the huge deficit, the repeat deficit for the coming year (which looks like it will be about the same as the current year). Congress knows what it has to do, but it really can’t get its act together. It needs leadership from the President. The President is giving an indication that he wants to give it and so I say ‘hooray!’ “

“There is a terrible, I think, delusion stemming from the Keynesian theorists of many years ago that the government can create jobs. And clearly it can boost employment, and boost the economy in the short-term; however the cost of those jobs, often, is a great deal more than they are worth. If a President or a government is careful in worrying about jobs, what it wants to do is rebuild the economy on the basis of the private economy, not on the basis of borrowed money stimulus stuck into the economy by a government who does not know where the next amount of money is going to come from that it wants to borrow.

My judgment is that the selective tax cuts are, by far, the best way to stimulate the economy. And you have to put them in for more than a very short period – certainly more than a year – to make them work right. The idea that we are going to build green jobs, or that we are going to build more highway ramp, or that we are going to fill more potholes, I think, has proved to be unworkable through every recession that I have observed since I came to Washington. We have seen what has happened to the infrastructure stimulus portion. They can’t get the money out, they can’t get the bids out at the state level, they can’t get anything cranking. And that is just the way the government works; that is the way it has to work. So I suggest they have to look at taxes again – primarily business taxes, small business taxes, appreciation, research and development, new ventures, etc. – and work on those problems. Forget about the so-called ‘pump-priming’ (of trying to make jobs by having the government hire people). We do not need any more great murals painted, as we did by the WPA in the Great Depression.“