I've been reading the commentary about the disconnect between what President Obama's political advisors want him to do--avoid a fight over additional stimulus and focus on reducing the deficit--and what the preponderance of economists believe is necessary--address the unemployment problem. Unfortunately, following the advice of his advisors is a dangerous trap for the president. Absent additional stimulus, the economy is unlikely to get better before the 2012 elections and this would be a significant problem for a president trying to get re-elected. Addressing the deficit now is a double whammy for for the president. First of all the Republicans have shown zero inclination to cooperate on producing a deficit reduction plan that can pass Congress. Even if they did, a reduction in spending now is exactly the opposite of what the economy needs.
The only sensible policy is to deal with unemployment now (if it's not already too late) and the deficit later--reducing it is going to be a challenge of the first order. The current deficit reduction plans actually will have little impact on the long run deficit but a potentially disastrous effect on the economy in the short run. If the Republicans understand this, they don't care, because it plays right into their 2012 election strategy. I don't know what the problem is with the Obama administration.
