Noam Scheiber’s article on the Obama administration’s dilemma as it tries to pair the dual imperatives of job-creation with deficit control is pretty disturbing. In particular, it suggests an administration that’s started to internalize some of the political constraints on fiscal expansion. To review, back last year Christina Romer told her colleagues that something like $1.2 trillion in fiscal stimulus was needed. For political reasons, that was scaled down to something more like $800 billion. The Senate then scaled that back to something more like $700 billion. So the day Barack Obama signed ARRA, his administration’s analysis suggested that $500 billion in additional stimulus would be a good idea. Then it turned out that the winter of 2009-2010—which basically all happened before the stimulus went into effect—featured a much sharper contraction than had been expected.

So it’s very strange to learn that members of the Obama administration economic team have started to feel that the deficit is too big, when their analysis strongly suggests that it’s much too small. They say they’re worried about the bond market, but the nice thing about the bond market is you can just go look it up and there’s no problem there:

Whatever reason you might have for worrying more about the deficit than you did three years ago, it can’t be the bond market. The bond market is telling you to worry less.

All that said, there is a way to create jobs and reduce the deficit. It’s to persuade the Federal Reserve Open Market Committee to implement the Gagnon Plan for additional quantitative easing. In an ideal world, the European Central Bank, the Bank of Japan, and the Bank of England could also be persuaded to follow Gagnon’s outline. His proposal to have the Fed buy $2 trillion in government bonds, with an average maturity of 7 years, would increase the GDP growth rate. That would make tax revenues higher. It would also increase the level of employment, reducing the need for outlays on unemployment insurance, Medicaid, SNAP, etc. That reduces the deficit.

If monetary easing has such magic properties, why don’t we do it all the time? We don’t do it all the time because we often worry about inflation. But right now inflation is extremely low and core inflation is expected to decline. If inflation were higher than it is right now, we’d be hitting our inflation target. That’s doesn’t sound so bad. If inflation were a bit higher than that, we’d be returning to the long-run price level trend. That doesn’t sound so bad either. And we’d have a more prosperous country, with fewer jobless people and a lower budget deficit. That nobody outside the blogosphere is even talking about this possibility is extremely frustrating.

If you ride a bicycle for practical purposes—getting around town, rather than for sports or recreation—then congressman Earl Blumenauer from Portland has your back. In this video, he rides around New York City and looks at recent improvements to bicycle infrastructure there:

And Megan McConville writes about a new federal initiative he’s involved with:

Last night in Washington, DC, the Brookings Institution and the National Association of City Transportation Officials (NACTO) kicked off Cities for Cycling, a new effort to catalog, promote and implement the world’s best bicycle transportation practices in American municipalities. As Brookings’ Metropolitan Policy Program Director Bruce Katz put it in his introduction, the event was host to a rock star panel, with Representative Earl Blumenauer (D-OR), New York City Department of Transportation Commissioner Janette Sadik-Khan, and David Byrne, former frontman of the band Talking Heads and long-time cycling advocate.

At any rate, if you bike and you don’t live in Portland, you really ought to get in touch with your congressman and register your existence with his or her office. It’s great that Blumenauer leads on this, but there’s no city in America whose congressional delegation is indifferent to the state of its highways, and there are many towns and cities all across the country whose elected officials are indifferent to the state of their bicycle infrastructure.

Paul Krugman notes a seriously dumb Washington Post editorial arguing that if Obama really wants to create jobs he should press harder for ratification of free trade deals with South Korea and Colombia.

I think the first thing to note about this is that if you compare the U.S. economy and the Colombian economy, you’ll quickly see that it’s absurd to think that U.S. policy toward Colombia could possibly have a large impact on the United States:

More broadly, as Krugman notes there’s just no reason to believe that trade agreements of any kind have a real impact on the aggregate employment level. The case for free trade is that when two countries lower trade barriers average living standards increase in both countries. But this has nothing to do with the unemployment rate. The 2009 version of the United States of America is much richer than the 1959 version, but it also has a higher unemployment rate. Spain has more unemployment than China, but China is much poorer than Spain.

Ultimately, I think this kind of double-talk from proponents of reducing trade barriers does the cause no good. The case for free trade is strong on the merits and ought to be made correctly. Making unrealistic promises about the jobs impact of trade deals, as was done before NAFTA, spurs feelings of backlash and betrayal. Probably the biggest public misunderstanding about things like the Colombia deal, and CAFTA before it, is simply that arrangements with these kinds of small, poor countries are barely noticeable in their impact on the United States. Making it easier for Colombians to sell goods to Americans will be a big help to Colombian exporters (our country is big and rich) and helping Colombia advances various U.S. strategic and humanitarian objectives, but as economic policy it’s about the same as doing nothing.

Meanwhile, though, we have ten percent unemployment and really need some serious economic policy! If the Post likes free trade, it’s really not going to like the trade policy consequences of years and years and massive structural unemployment.