THE ECONOMY: OBAMA
SPECIFIC POLICY POSITIONS
Obama’s economic philosophy? The government “can help.” As he told Congress in September, “Our recovery will be driven not by Washington but by our businesses and our workers. But ... we can make a difference.” That was the idea behind the 2009 stimulus, which injected $787 billion into the economy. Since then, Obama has focused on creating “an economy built to last,” based on manufacturing, clean energy, innovation, tax reform, and skills training. He rejects the “social Darwinism” of the plan from House Budget Chairman and Romney running mate Paul Ryan, and decries the notion that prosperity trickles down from the top; the economy must grow, Obama says, “outward from the heart of the middle class.” He argues that his policies rescued the economy and steered it to today’s (slightly) calmer waters.
Obama plans to use a combination of infrastructure spending, skills training, tax cuts for small businesses, and hiring incentives to create jobs. His “We Can’t Wait” series of executive orders, which the White House says is aimed at supporting the middle class, contains a number of job-creation measures along these lines, including a summer-jobs program for young Americans; resources for start-ups and for companies that hire and invest in the United States; and help for veterans who are job hunting in the private sector. Education is a core component of Obama’s philosophy “When we know that most of today’s middle-class jobs require more than a high-school degree, we shouldn’t gut education, or lay off thousands of teachers, or raise interest rates on college loans, or take away people’s financial aid,” he said in April.
The housing market will be a drag on Obama’s legacy, as it is clearly the main drag on the recovery. The administration has introduced a patchwork of proposals to shore up the sector—such as the Home Affordable Modification Program and the Home Affordable Refinance Program—but has tended to sideline anything politically risky. The programs it did put in place haven’t eased much pain. Obama pledged a return to the drawing board last summer, and he has since activated some policies that had been percolating among experts, such as February’s $25 billion mortgage-servicing settlement and tweaks to HARP.
The Obama administration has repeatedly declined to designate China a currency manipulator, which could open the door to trade sanctions. Instead, the president simply urged China to play by global trade rules. On the European economic crisis, the administration has allowed the Federal Reserve Board to play the primary U.S. role. The Fed uses its dollar-swap lines to provide liquidity to the European Central Bank, which can in turn lend to struggling European countries. The administration has declined to intervene more directly by providing additional cash to the International Monetary Fund, the first line of defense for the European economy, as the crisis again rears its head.
Although President Bush kick-started the bailout with an initial infusion of money, Obama implemented long-term reforms that turned the industry around.
A desire to insulate the financial sector and avoid political risk kept the administration from truly tackling the housing crisis, which still dogs the country’s economic recovery.
The economy lost nearly 4.2 million nonfarm jobs during Obama’s first year. Since then, payrolls have grown by 6.6 million. The private sector added 4.5 million jobs over the past 29 months, but the unemployment rate remains at 8.3 percent.
Early data suggest that income inequality grew more under Obama than Bush. The top 1 percent of earners made 65 cents for every dollar created from 2002 to 2007. They made 93 cents during the 2009-10 recovery.
Gene Sperling: The Yale-educated Sperling runs the National Economic Council (as he did during the Clinton administration) and is assistant to the president for economic policy. Before Obama appointed him in January 2011, he was advising Treasury Secretary Timothy Geithner.
Alan Krueger: A labor economist, Krueger has chaired the White House Council of Economic Advisers since November. Like Sperling, he has a background at Treasury, and he worked at the Labor Department in the mid-1990s. He is on leave from his job as an economics professor at Princeton University.
This article appears in the August 25, 2012 edition of National Journal Magazine.