Republicans and other conservatives have successfully made the deficit the number one political issue, meaning that any jobs initiatives will have to take a back seat to cutting back the deficit.
Take a look at the comments below:
In addition to pushing the U.S. agenda, Obama is certain to face tough questions from other G-20 countries over whether his administration can develop a credible plan to curb a soaring U.S. budget deficit that the White House projects will hit an eye-popping $1.548 trillion this year and total $9 trillion over the next decade.
As part of an effort to convince the world that he is serious about getting the deficit under control, Obama is pushing a plan that would require the United States and other countries to make sweeping changes in how they manage their deficits.
The goal is to prevent the destabilizing imbalances represented by America's high budget and trade deficits, and huge trade surpluses in countries such as China.
Obama's initiative would require chronic trade-deficit nations like the United States to boost their savings rates to consume fewer imports, and for trade-surplus countries like China to get their consumers to spend more and rely less on export-led growth.
"We can't go back to an era where the Chinese or the Germans or other countries just are selling everything to us, we're taking out a bunch of credit card debt or home equity loans, but we're not selling them anything," Obama said during a CNN interview broadcast Sunday.
Obama has bought into this idea of "imbalances" that have to be fixed and he will support policies that lead to more exports even if that means Americans stay unemployed longer and wages remain low. (The latter is a necessary requirement for comparative labor cost advantage--the only way we will get real export gains.)