How Obama can change debate on spending 

President Barack Obama stepped across the street Monday to deliver a much-ballyhooed speech of reconciliation to an attentive audience at the U.S. Chamber of Commerce. Obama said all the right things about the connection between capitalism, individual freedom and national economic prosperity. He promised to knock down barriers that make it harder to compete, including the tax code and regulatory system. He even said we need to make America the best place on Earth to do business.

In a cordial response to his extended hand of cooperation and good will, Chamber President Thomas Donohue assured Obama of the American business community’s “absolute commitment to working with you and your administration to advance our shared priorities. Our focus is finding a common ground to advancing America’s greatness.”

Monday’s sweetness and light took a hit Tuesday when it was learned that Obama’s forthcoming 2012 federal budget proposal will include a measure to enable states to hike their unemployment taxes on businesses, at an estimated cost of at least $100 billion, according to an unnamed individual who helped put together the White House proposal and who was quoted by the Wall Street Journal. The official purpose of the increased levies is to help state governments replenish unemployment funds depleted by the Great Recession.

It may well do that, if enacted, but taking yet another $100 billion out of the private economy and putting it into government coffers does not seem like an efficient way to address an unemployment rate that stubbornly remains above 9 percent.

Rather than proposing new ways of taxing private companies, the president would do better to put some meat on his rhetoric regarding the federal government’s debt and overspending. Obama called for both parties to work together, “because those are some tough problems that we’re going to have to solve. And I am eager to work with both parties and with the Chamber to take additional steps across the budget to put our nation on a sounder fiscal footing.”

To that end, Obama should publicly encourage his congressional Democratic allies to drop their plan (reported by Politico) to define House Republicans as irresponsible and unready to govern when they vote on the specific details of their budget cuts in the next two weeks. Democrats are gearing up to take on the cuts as extreme and damaging to a host of popular programs.

If Politico is right, congressional Democrats are primed to do what they always do when Republicans propose spending cuts: paint the GOP as a heartless skinflint that just wants to kick Granny and poor people to the curb. That will only promote further political polarization. Obama would bolster his credibility as a voice of reason and do everybody else a service by telling the Democrats to cool it.

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