Does Creating Jobs Mean Creating More Debt?

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Despite all the attention given to Afghanistan this week, President Obama knows that most Americans' biggest concern is the lackluster economy. When new unemployment numbers come out on Friday, they're likely to show that tens of thousands of people lost jobs in November. So the White House is hosting a jobs summit Thursday to collect ideas about how to put people back to work.

The administration will get advice from big-business executives, small-business owners, economists, union leaders and the mayor of Allentown, Pa. Obama also plans to visit Allentown on Friday to kick off a "White House to Main Street" tour.

"We have some people who are really hurting," says Allentown's Mayor Ed Pawlowski. "We're going to talk about things they could do to help stimulate jobs and improve the economy, as far as loosening up lending, getting some credit into the marketplace."

Limited Resources

The administration has been trying to boost credit for small business with limited success. But the president has been hesitant about spending a lot more money to create jobs. He's caught in a political tug of war between those worried about rising unemployment and a rising federal deficit.

"There's one group that says we need to do more about the economy, more to create jobs," says political analyst Charlie Cook. "And then there's the other side that's saying we're blowing the heck out of the budget deficits. And so they're getting squeezed."

Some critics argue that the guest list for Thursday's summit is stacked with those who favor additional government spending. But since pushing for the big stimulus package earlier this year, the administration has been stressing fiscal restraint. In announcing the jobs summit, Obama said it's particularly important at a time of limited resources that the government not make any ill-considered moves.

"If we keep on adding to the debt, even in the midst of this recovery, at some point people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession," Obama said in an interview with Fox News.

That note of caution was welcomed by economist Diane Lim Rogers of the Concord Coalition, which promotes fiscal responsibility. Rogers notes that many of the president's top economic advisers are veterans of the Clinton administration, whose balanced budgets were credited with spurring economic growth. She argues that some deficit spending may be warranted in the current climate, but only within limits.

"Just because we decide we need more deficit spending, and we may decide we need that, does not mean it's OK to waste the money," she says.

A Matter Of Priorities

Other economists argue that this is no time for the administration to worry about deficits in light of double-digit unemployment.

"I mean, I understand politically, they have to appear to be concerned," says Dean Baker of the Center for Economic and Policy Research. "But this year, next year, the year after, we need to run large deficits to keep the economy going."

Other liberal economists want the government to offer tax credits to encourage employers to hire people, or even launch its own jobs program as it did during the Great Depression. And they're not worried about using borrowed money to do so.

"There's no way to generate more jobs in the next two years without incurring a higher fiscal deficit. In fact, it's a smart thing to do," says Larry Mishel of the Economic Policy Institute. "We're doing tremendous damage to people, to children and to the economy by this high, persistent unemployment."

President Obama says he's determined to meet the challenge of joblessness, even as he cautions that there are limits to what the federal government can or should do.

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