Busch: Advice to Obama: Keep Republicans Busy

Today, the US House of Representatives is going to fulfill an election pledge by voting to repeal Obamacare. Voter anger over many issues helped return the opposition party to power in the lower chamber of Congress. This vote is one such manifestation and attempts to highlight the differences on this issue between the major parties.

"Our vote to repeal is not merely symbolic," said freshman Rep. Nan Hayworth, R-N.Y., an ophthalmologist. "It respects the will of the American people. And it paves the way to reform our health care." The major problem with the health care reform law is that it doesn’t reduce the cost of health care. Health care costs have risen at a 9% clip in the United States for 30 years and will become acute as the Baby Boomers start retiring.

Today’s action is symptomatic of the Republican strategy of "Repeal and Replace" towards the Obama administration’s major legislative victories of health care and financial regulatory reform. There are significant problems with these pieces of legislation that need repair or they will (already) have a negative impact not only on the nation’s fisc, but also on the nation’s economy.

The question for President Obama is this: how should he constrain a Republican House bent on tearing down his work?

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The answer: shift the focus.

If idle hands are the Republican devil’s workshop, give them something meaningful to do. A subject that is near and dear to the Tea Party members is fiscal and tax reform. The President needs to formally announce he supports the findings of his commission on fiscal and tax reform. He needs to ask for legislation to be written and a vote to be held.

This would accomplish many important tasks for the President and the country.

As we have learned from Europe, the markets are brutal when it comes to countries that have large fiscal deficits. They act aggressively and punish the citizens for the governments’ over spending.

Clearly, the United States is in this category as the short term deficit has soared to $1.4 trillion per year and the long term trend of spending on social services is unsustainable. By the way, fixing these problems will also generate rallies in the stock and bond markets.

Tax reform is needed as well to incent workers to work and companies to hire.

The current tax code does neither and desperately needs to be changed. A flatter, lower tax structure that removes many of the tax expenditures would be a significant improvement. This is precisely what President Obama’s commission proposed.

Formally supporting these changes provides the President three major benefits.

First, he would lay the groundwork upon which the economy can not only grow, but compete against other countries. This would provide jobs and lower the unemployment rate. Second, the Republicans focus would be taken away from deconstructing current polices to creating new policies of lower taxes and less government spending.

If these are accomplished, the third benefit to President Obama would be returning to office in 2012.

Andrew B. BuschDirector, Global Currency and Public Policy Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a frequent CNBC contributor. You can comment on his piece and reach him hereand you can follow him on Twitter at http://twitter.com/abusch.