President Barack Obama on Thursday disputed the notion that he is overly concerned about the budget deficit -- and as a result, is under-reacting to the jobs crisis.
Obama said he believes that the best way to reduce the deficit is through economic growth, and that by contrast, cutting back on government stimulus too early could stifle the recovery.
"Now, if we can't grow our economy, then it is going to be that much harder for us to reduce the deficit," Obama said. "The single most important thing we could do right now for deficit reduction is to spark strong economic growth, which means that people who've got jobs are paying taxes and businesses that are making profits have taxes -- are paying taxes. That's the most important thing we can do."
Obama's answer came in response to a question from Bob Kuttner, an editor of The American Prospect and a Huffington Post contributor, during the White House jobs summit. It received little attention from a mainstream media that prefers driving the storyline that the deficit is the greatest threat facing the economy.
Worries about Obama's willingness to keep spending is rooted in President Franklin Delano Roosevelt's experience. In 1937, FDR bowed to deficit hawks and cut spending, jerking the economy back into what became known as the recession-within-the Depression or, alternatively, the Roosevelt Recession.
Seeking to avoid an Obama Recession, the president said: "The last thing we would want to do in the midst of what is a weak recovery is us to essentially take more money out of the system either by raising taxes or by drastically slashing spending. And frankly, because state and local governments generally don't have the capacity to engage in deficit spending, some of that obligation falls on the federal government."
The time for reducing the deficit is once the economy is back on track, Obama said. "Having said that, what is also true is that unless businesses and global capital markets have some sense that we've got a plan, medium and long term, to get the deficit down, it's hard for us to be credible, and that also could be counterproductive. So we've got about as difficult a economic play as is possible, which is to press the accelerator in terms of job growth, but then know when to apply the brakes in the out-years and do that credibly," he said. "But it is absolutely true that any of the ideas that have been -- been mentioned here are still going to require some public dollars, and those are actually good investments to make right now."
Obama, with these comments, was taking the same posture congressional leaders have for some time now as they push the White House hard for more action on job creation. House Speaker Nancy Pelosi (D-Calif.) and Majority Leader Steny Hoyer (D-Md.) have both said that getting the economy going is the quickest route to a lower deficit.
"The debate between deficit reduction and job creation is not a real choice, because we'll never have deficit reduction unless we have job creation," said Pelosi.