Two years ago, President Obama declared to the residents of an eastern Las Vegas neighborhood, "We can't wait for an increasingly dysfunctional Congress to do its job. Where they won't act, I will." Weeks earlier, GOP lawmakers had blocked Obama's $447 billion American Jobs Act.
The first officially "We Can't Wait" action that Obama took, announced in that speech, was to make it easier for some homeowners to refinance their mortgages. Since then, the administration has taken an additional 43 solo steps to "support middle-class Americans," according to the White House website. These range from a recess appointment of Richard Cordray to head the Consumer Financial Protection Bureau to investing $4 billion in making buildings more energy efficient. Other initiatives are in the works.
But the White House can't—and hasn't—moved the needle on the nation's sluggish growth and high unemployment with these maneuvers. What the administration can do by going it alone is to affect a targeted group of individuals (as it did by introducing new wage and overtime protections for roughly 2 million home-care workers in December 2011), speed up spending on certain projects, try to make the government more efficient, and set the stage for future innovation. These steps are not economic game-changers in the short term.
Economic expectations for the we-can't-wait actions were always small in scope, even within the administration. White House Communications Director Dan Pfeiffer explained when the initiative was launched, "These steps aren't a substitute for the bold action we need to create jobs and grow the economy, but they'll make a difference."
It's not the only place the administration has staked a go-it-alone strategy. National Journal reported last month how Obama's use of his executive authority on gun control, climate change, health care, and national security made him one of the most powerful presidents ever. But on the economy, the president can only nibble around the margins without Congress, and even there, the impact is tough to see in the data. "I would give the initiatives a high grade, but I would apply it to a very small corner of the problem," says Jared Bernstein, a former economic adviser to Vice President Joe Biden. "In terms of moving the macro economy, they tend to be of too small a scale."
It's clear from looking at the White House list how small-scale many of the items have been. The $4 billion investment in energy efficiency is just 0.024 percent of the $16.6 trillion U.S. economy; another move freed up $473 million for infrastructure projects.
Katharine Abraham, who was a member of the White House Council of Economic Advisers from 2011 to 2013, groups the actions into four broad categories: putting more money into consumers' pockets; making the environment better for business; making government more effective; and accelerating investment in transportation and infrastructure.
Economists interviewed by National Journal said the last of those objectives has the most promise for boosting the struggling recovery because it can provide an immediate infusion of cash into the economy. Consumers might inject some new life into the economy with extra money in their pockets from, say, refinancing or getting a summer job through a new program aimed at young people. A more efficient government is certainly an admirable aim, but eliminating inefficiencies could also reduce jobs, offsetting some of the economic benefits of productivity.
The National Additive Manufacturing Innovation Institute, a public-private partnership and the first of 15 incubator-type manufacturing institutes the White House wants to create, is one we-can't-wait initiative that economists say might help revive the economy. NAMII specializes in 3-D printing, a technology that is seen as revolutionary but has a number of kinks to be worked out. The hope is to spur a technological revolution and breathe new life into manufacturing. This is a long-term hope.
With the short term in mind, the White House announced in early 2012 a pilot program to help small-business exporters gain credit and a more streamlined process for exporters looking to delay or reduce duty payments on foreign merchandise. "They've done ... some smart things on manufacturing, and we've seen some growth in the sector," Bernstein says. (Manufacturing activity expanded for the fifth-straight month in October, according to the latest Institute for Supply Management national survey.) "Are they related? You know, maybe a little bit at the margin, but I wouldn't push it too far."
The White House says it's trying to move the ball forward any way it can, in the hopes that these small steps will add up to something big over time, demonstrate to Congress the potential of certain initiatives, and help a chunk of Americans in the meantime. A few, says a senior administration official, have the potential to transform the economy. NAMII is one; SelectUSA, a Commerce-State Department effort to encourage foreign and domestic companies to invest in the U.S., required a reorganization of the government, one that could permanently change the way business is done, the official said.
Even if growth is stuck for now, it's politically smart for the White House to focus on the economy. According to the Pew Research Center, 86 percent of the public in January ranked "strengthening the economy" as a top priority for Congress and the White House in 2013, although the administration's act-unilaterally attitude has drawn criticism from the Right for subverting regular processes.
A White House focus alone isn't enough. In terms of the macroeconomy, the White House has limited powers. It needs Congress to get into the act.
This article appears in the November 9, 2013 edition of National Journal Magazine as Going It Alone.
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