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After Unemployment Extension, White House Shutting Down Stimulus Efforts

David Axelrod appeared on This Week and acknowledged that the Administration has little chance of getting anything beyond an extension of unemployment benefits through Congress between now and the election. That extension would appear to have 60 votes whenever Robert Byrd’s replacement gets into the Senate. But that jobs bill that had all the tax extensions and infrastructure funding and summer job money? Forget it. Aid to state Medicaid programs? Isn’t going to happen. Extending the COBRA subsidy to keep the jobless covered? Nope.

In his February budget proposal, the president requested $266 billion for additional stimulus for the economy. And just a month ago, the President called for $50 billion in emergency aid to states alongside the extension of unemployment benefits. This morning Axelrod called again for extension of unemployment benefits, but aid to states was not on his list.

“It’s true that there is not a great desire” on Capitol Hill to spend more money, Axelrod said, “even though there is some argument for additional spending in the short-run to continue to generate economic activity.”

“There’s not a great appetite for it, but I do think we can get additional tax relief for small businesses – that’s what we want to do – additional lending for small businesses,” the President’s senior advisor said.

This comes at a curious time, when other members of the Administration, including the President, are pushing certain stimulative activities. Obama called for $5 billion in clean energy tax credits to create 40,000 jobs in Nevada this week. Education Secretary Arne Duncan stressed the urgency of the education jobs funding to save at least 140,000 teachers from layoffs, a measure the Administration threatened to veto because it was paid for in part with a sliver of Race to the Top money. (Duncan said that Congress would have to “find a way” to pay for the teacher fund. They already have!)

But Axelrod, according to published reports, has been out front in stressing spending reductions in internal meetings with the President, believing that the public has shown concern about deficits. So his fallback to small business measures and wiping stimulus off the table should come as no surprise.

However, as Duncan Black says, there’s more than one way to make that shift, especially if the economic team understands the importance of more stimulus to support the economy.

So let’s say Obama’s people have correctly deduced that there’s no chance in hell of getting anything through Congress. They have two basic options. First, they could get on the teevee every day and say, “This is my plan to help. Republicans in Congress won’t pass it.” They could hold rallies in Maine. Allies could run ads. At least people would know who is for and who is against…and just what it was that people are for or against.

Option two is back off proposals you’ve previously made and have Axelrod get on the teevee and say, “there is some argument for additional spending in the short-run to continue to generate economic activity.”

Surely the lead political strategist in the White House recognizes the political importance of assigning blame?

Or, maybe not.

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David Dayen

David Dayen