Republicans and Democrats must agree on a “balanced compromise” on budget deficit reduction that avoids “penny-wise but pound-foolish” spending cuts, a top economic adviser to President Barack Obama said.
The U.S. needs long-term savings on entitlement spending, higher taxes on the wealthy and “immediate support for jobs and the recovery,” Gene Sperling, director of the National Economic Council, said today in a speech to the Economic Club of New York, according to excerpts released by the White House.
“If you are someone who is concerned about structural unemployment you should be obsessed with immediate job creating measures,” Sperling said. He said the nation risks “allowing the crisis of long-term unemployment to add significantly to the future ranks of the structurally unemployed.”
He said construction unemployment at 14.2 percent and yields on U.S. Treasury debt “hitting the lowest rate ever last week” make it an ideal time for the federal government to address infrastructure needs, such as repairing and building roads and schools.
“Will there ever be a better time for deferred maintenance?” Sperling said.
Yields on 10-year Treasury notes were up 8 basis points or .08 percentage points to 1.66 percent at 4:42 pm New York time today.
Sperling said extending tax cuts for the wealthy that are set to expire at the end of the year would be “among the least effective measures imaginable for promoting immediate jobs and growth.” At the same time, he said, it would signal “a lack of shared sacrifice” and would undermine “a serious commitment to tackling our long-term fiscal challenge.”
The administration is seeking to avoid a slowdown in growth. Jobs in the U.S. grew by 69,000 in May, the fewest in a year and less than the most pessimistic forecast in a Bloomberg News survey of private economists. The unemployment rate rose to 8.2 percent, the first increase since last June.
Sperling also argued that the package of measures to boost job creation that Obama proposed last year would have bolstered the recovery. Republicans in the House rejected most of the provisions.
“Had Congress passed even a significant portion of the American Jobs Act’s provisions for rebuilding schools, immediate infrastructure investments, or a national infrastructure bank, there would be more construction activity, and more jobs, instead of losing another 28,000 construction jobs this month,” he said.