In this Friday, Nov. 22, 2013 photo, shoppers walk past windows at a Joe Fresh clothing store in New York.
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Creating the wrong economic incentives

Updated
By most metrics, the U.S. economy has improved, slowly but surely, every year since the height of the global crash in 2008. And looking ahead, many economists expect 2014 to be the year in which a meaningful recovery takes root. Paul Krugman recently joked, “There’s an alarming amount of optimism out there about US economic prospects for 2014. Let me make the situation even more alarming by saying that I basically share that optimism.”
 
The political world will certainly be influenced by whether these expectations come to pass. Indeed, congressional Democrats believe growing public satisfaction with the economy may give the party a boost in the 2014 midterms, when two months of trouble with the health care website are a distant memory.
 
In an interesting twist, GOP officials are basing their midterm plans on a similar strategy.
House Republican leaders are increasingly confident the economy will be a winning issue for their party in the 2014 midterm elections.
 
Republicans believe they can exploit the underlying weakness of the job market and argue voters should expect a better economic recovery than they are seeing under President Obama’s watch.
House Speaker John Boehner (R-Ohio), reaching back to the 2010 talking points he hasn’t used since, told reporters this week, “It’s going to be about the issue of jobs, and when you look at it, the American people have a right to continue to be asking, ‘Where are the jobs?’”
 
On a substantive level, it’s probably tempting to see this as little more than madness. The same Republican lawmakers who’ve refused to even try to help the economy over the last three years intend to run on the economy in 2014? The very idea seems demonstrably ridiculous. Boehner has held several dozen votes to repeal the Affordable Care Act since becoming Speaker, but hasn’t brought any credible jobs bills to the floor. “Where are the jobs?” is a question better suited for him than the president.
 
But for Republicans, there’s a simple assumption: voters won’t appreciate the details. The public knows Obama’s the president; they know the economy is not yet where it needs to be; and so the GOP assumes the public will simply blame the president and his party, whether that makes sense or not – and those assumptions may very well be correct.
 
But there’s a related issue that’s worth watching: doesn’t this build into the system an unhealthy set of incentives?
 
Or put another way, congressional Republicans hope to base their election strategy on public dissatisfaction with the economy. These same congressional Republicans have the ability to make the economy worse.
 
You see the problem.
 
This has the potential to shape practically every policy debate for the rest of the year. Democrats may remind Republicans that comprehensive immigration reform would give the economy a boost, but for those who don’t want the economy to improve ahead of the 2014, that won’t be a persuasive argument.
 
Democrats can argue that investing in infrastructure and education would go a long way towards lowering unemployment in a hurry, but again, if the House majority sees self-rewarding value in higher unemployment, those investments are far less likely.
 
More to the point, Congress is currently engaged in a fight over extended unemployment benefits. Economists of every political stripe have told policymakers that failing to extend the aid will undermine economic growth and cost the U.S. economy in upwards of 300,000 jobs, and yet Republicans refuse to pass the measure that used to enjoy bipartisan support.
 
Perhaps now we know why?
 
There’s no real need to speculate; the proof will be in the policymaking. Republicans have already fought for a series of policies that did real, measurable damage to the economy – debt-ceiling hostage crises, a government shutdown, sequestration cuts, the end of the payroll tax break, a rejection of the American Jobs Act, the expiration of federal unemployment benefits, etc. – making their “where are the jobs” rhetoric tough to stomach.
 
If they’re prepared to be more constructive in 2014, it will be apparent in their policy agenda. If they want the economy to be weaker going into the midterms, that will be apparent, too.
 
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Creating the wrong economic incentives

Updated