Here's one area where Republicans and Democrats sharply differ. Both sides agree that rising national debt poses a serious threat to the economy over time. But many liberals say the US needs more near-term fiscal stimulus, even if that means higher deficits for now.
Christina Romer, Obama's former top economist, is among those who argue that the initial $787 billion package of tax cuts and spending passed in 2009 helped, but wasn't enough to match the magnitude of the jobs problem.
In a December speech, Ms. Romer said Obama's recent proposed follow-on, the $447 billion American Jobs Act, is on the right track but should be larger. But economists are divided over whether stimulus is effective. After a long and deep recession, in particular, it may not be easy for stimulus to generate a snapback to the prior "normal."
So Republicans argue for policies designed to reduce taxes, regulation, and federal spending. They argue this will free up resources and boost private-sector spirits.
A rapid downsizing of government, however, would pull spending out of the economy, perhaps even causing a new recession. Thomas Donahue, president of the US Chamber of Commerce, emphasized the opportunity for gradual spending reforms in a recent speech on how to boost job growth and also called for steps like domestic energy development and innovation policies.
Some economists embrace a hybrid approach on fiscal policy, imposing new discipline but not too fast – and perhaps throwing in some added temporary boosters for the economy.
