A big legislative proposal can frame the issue and paint Obama’s intentions in bold colors. It should include three elements:
1) Long-term fiscal retrenchment. The easiest and best way is to adopt the Simpson-Bowles deficit plan. The Simpson-Bowles commission’s recommendations have been established as a credible bipartisan solution. Adopting its plan outright would signal that Obama is not playing partisan games and would redress the (justified) criticism that he has finessed the deficit. Not least, Simpson-Bowles compares favorably on grounds of balance, economic plausibility and public appeal with the budget of Rep. Paul Ryan (R-Wis.), which Romney endorsed.
2) Short-term economic stimulus. Republicans will howl about more spending. Let them. Stimulus measures make sense when unemployment is high and the world is teetering on the edge of a second recession. And provided they are coupled with a credible long-term retrenchment, they are politically and economically defensible. Such measures have a further political advantage: Obama and the Democrats would be running on what they believe is the right answer, instead of running away from it.
3) A two-year debt-limit extension. Declare that another debt-limit fiasco is unacceptable and demand that the issue be taken off the table. Let Republicans explain why they want to hold a gun to the economy’s head.