THINK of reducing the deficit as the cart and creating jobs as the horse. One clearly has to come before the other - or you're not going anywhere.

President Obama's speech on the economy yesterday signaled that he understands that sometimes you have to increase the deficit in order to reduce it. Using government funds to spur job creation will add to the deficit in the short term, but once people are back to work, they'll pay more in taxes and need less from safety-net programs. The deficit will then decrease, and so will the suffering and anxiety of millions of Americans.

Obama's proposals, targeted at spurring job creation in the private sector, would benefit cities like Philadelphia. That is, unless Congress dilutes the proposals, like it has so many other of Obama's programs - without his putting up much of a fight. (See: Stimulus. See: Foreclosure program. See, especially: Health care.)

Here are the president's three priorities:

* Use tax breaks to help small businesses - which

created 65 percent of U.S. jobs in the past decade - to grow and add workers.

* Increase investment in infrastructure: renovating bridges, highways and airports to increase jobs in the medium term, as well as to provide assets in the long term.

* Provide rebates for people to retrofit their

homes to become more energy-efficient - what some have dubbed "Cash for Caulkers." This would stimulate demand for construction materials and construction workers, and provide incentives to create new energy-saving products.

In a conference call with reporters yesterday, Christina Romer, head of the president's Council of Economic Advisors, pointed out that businesses and individuals might be in a better position to take advantage of these incentives now because the economy has improved mildly in recent months.

The administration has been floating the idea of underwriting the programs with about $200 billion that won't be needed for the bank bailout, but make no mistake, Obama's proposals will add to the deficit. But the nation has to create seven million new jobs just to get back to where we were when the recession started two years ago, and deficit spending is the only way to do it.

It's simple - that is, unless your political fortunes depend on not creating jobs. As so-called "deficit hawks" pound the table about government spending, it's useful to repeat, as Obama did yesterday, that the tax cuts and spending that helped create the $1.3 trillion deficit he inherited were approved by many of the same people who are "waxing political about fiscal responsibility" now. It's a testimony to the America's short attention span that anyone pays attention to them.

Yesterday's proposals won't be turned into bills until next year. But Congress must act now - before it adjourns on Dec. 18 - to extend for another year the unemployment benefits and a 65 percent subsidy for COBRA health-care coverage that were part of the federal stimulus. Otherwise, 1 million workers will become ineligible for benefits in January, and the number will grow to 3.2 million in March, according to a report by the National Employment Law Project. (In Pennsylvania, about 28,000 people would be affected.)

Immediate action is needed, not only to prevent human misery, but also the crippling burden the cutoff would impose on states. Besides, unemployment benefits proved to be the most effective part of the stimulus program, since recipients spent the money as soon as they got it.

Yesterday, Obama pledged again to reverse decades of putting off "hard decisions" in Washington.

This decision shouldn't be hard at all.