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The Wrong Deficit

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Deficit fever has swept through our capital, and President Obama has finally caught it. However, his speech is focusing on the wrong deficit. And that's because, quite sadly, our political culture is obsessed with the wrong deficit. Yes, the American people want to put our government's fiscal house in order. But, more than anything else, the American people want jobs. And it doesn't take an economist to understand that if we create more jobs, our nation's fiscal position will improve.

The jobs deficit in our nation is a crisis. The effective unemployment rate is still over 15 percent. McDonald's announces 50,000 new jobs, but these positions pay near-poverty wages. We will not win the future by flipping Big Macs. One company in China, Foxconn, which produces for Apple and other name brands, created more jobs last year than the entire American manufacturing economy. Manufacturing in America, which is doing better right now than most other sectors of the economy, is still 24 years away from regaining the 5.5 million factory jobs we lost over the last decade, assuming last month's pace of job creation can continue.

Congress and the Administration should be competing for the best jobs plan, right? Not at all. The modest investments of the Recovery Act are winding down. There seems to be no appetite for funding long-term investments in infrastructure, clean energy manufacturing, or basic and applied research that could be commercialized domestically. The tax debate is centered on everything except what type of tax reform can reward domestic production and employment.

We are in a post-recession and post-election haze, and it has clouded our vision about the truly important things. The debate on how to ride out the recession has been over for more than a year now, but the debate about how to rebuild a sustainable, balanced economy has not even begun.

Some smart takes on boosting jobs as a solution to our fiscal problems have popped up in the blogosphere, but they have failed to penetrate the center of the political debate. They should.

The formula is so simple that it seems too good to be true: job creation means more revenue for the Treasury and lower demand for public services. That lowers our budget deficit.

There's a lot that our government can do at no cost to taxpayers to support American job creation: lower the growth-sapping trade deficit, end China's manipulation of its currency, apply "Buy America" policies to more of our procurement, direct tax advantages to domestic production and away from shelters. But I haven't heard a peep from Republican leaders in Congress or the Administration about any of these initiatives, even though they all enjoy support from more than 80 percent of the American people--left, right and center.

Where's the outrage?

Believe it or not, I think it might come from the Republican presidential wannabes, who talk to real people every week. I'm not saying their prescriptions are ideal, or even sane in some cases, but they will at least get the conversation started. There is a reason beyond mere name recognition and the absurd "birther" issue that Donald Trump polls so well: he talks about China and jobs in an honest way that no leader in D.C. does. The conversation has to get started, but there is certainly a better way to finish it.

For now, the budget deficit reigns supreme. The President's speech today is just one more indication of how no one wants to be left out of the fiscal debate. It is a travesty that the wishes of the American people have been left out altogether. When the President ventures to Ohio or other swing states, he is sure to hear a different tune: show me the jobs.