A Grand Bargain on Job Creation and Deficit Reduction – Is It Possible?
On September 9, the day after President Obama’s address to Congress on job creation, the Budgeting for National Priorities project at Brookings hosted a panel discussion to examine the options for an agreement that could increase economic growth in the short term while reducing the budget deficit in the medium and long term. Senior fellow Ron Haskins moderated a panel that included Alice Rivlin, Isabel Sawhill, and Adam Looney of Brookings as well as Douglas Holtz-Eakin of the American Action Forum.
The panelists agreed that odds are still good for a “grand bargain” that will both increase job growth and reduce the federal budget deficit – and agreed that should be the goal. Alice Rivlin noted that both policies need to be pursued simultaneously, that much of the hard work of developing policy details has been done by two commissions, and that “there is more will to work together now that there was a few months ago.”
Both Rivlin and Adam Looney argued for investments in infrastructure and human capital. Looney noted that the depth of the “jobs gap” means that policies to increase employment in both the short run (such as the jobs tax credit) and the longer run (such as policies to spur training and education) will be valuable. Rivlin noted the importance of preventing layoffs at the state level, and Isabel Sawhill discussed how to best design a payroll tax holiday. While expressing skepticism about many of the policy ideas proposed by President Obama, Doug Holtz-Eakin noted that Republicans in Congress are likely to engage on the agenda, probably extending unemployment insurance and getting into “real back and forth” on aid to states and infrastructure.