Does the President Alone Have the Power to Heal the Economy?

In some areas — such as energy and immigration — he can make big changes unilaterally. On the economy, it’s much harder.

National Journal
Catherine Hollander
See more stories about...
Catherine Hollander
Nov. 7, 2013, 4 p.m.

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.

What We're Following See More »
STAFF PICKS
When It Comes to Mining Asteroids, Technology Is Only the First Problem
2 days ago
WHY WE CARE

Foreign Policy takes a look at the future of mining the estimated "100,000 near-Earth objects—including asteroids and comets—in the neighborhood of our planet. Some of these NEOs, as they’re called, are small. Others are substantial and potentially packed full of water and various important minerals, such as nickel, cobalt, and iron. One day, advocates believe, those objects will be tapped by variations on the equipment used in the coal mines of Kentucky or in the diamond mines of Africa. And for immense gain: According to industry experts, the contents of a single asteroid could be worth trillions of dollars." But the technology to get us there is only the first step. Experts say "a multinational body might emerge" to manage rights to NEOs, as well as a body of law, including an international court.

Source:
STAFF PICKS
Obama Reflects on His Economic Record
2 days ago
WHY WE CARE

Not to be outdone by Jeffrey Goldberg's recent piece in The Atlantic about President Obama's foreign policy, the New York Times Magazine checks in with a longread on the president's economic legacy. In it, Obama is cognizant that the economic reality--73 straight months of growth--isn't matched by public perceptions. Some of that, he says, is due to a constant drumbeat from the right that "that denies any progress." But he also accepts some blame himself. “I mean, the truth of the matter is that if we had been able to more effectively communicate all the steps we had taken to the swing voter,” he said, “then we might have maintained a majority in the House or the Senate.”

Source:
STAFF PICKS
Reagan Families, Allies Lash Out at Will Ferrell
2 days ago
WHY WE CARE

Ronald Reagan's children and political allies took to the media and Twitter this week to chide funnyman Will Ferrell for his plans to play a dementia-addled Reagan in his second term in a new comedy entitled Reagan. In an open letter, Reagan's daughter Patti Davis tells Ferrell, who's also a producer on the movie, “Perhaps for your comedy you would like to visit some dementia facilities. I have—I didn’t find anything comedic there, and my hope would be that if you’re a decent human being, you wouldn’t either.” Michael Reagan, the president's son, tweeted, "What an Outrag....Alzheimers is not joke...It kills..You should be ashamed all of you." And former Rep. Joe Walsh called it an example of "Hollywood taking a shot at conservatives again."

Source:
PEAK CONFIDENCE
Clinton No Longer Running Primary Ads
2 days ago
WHY WE CARE

In a sign that she’s ready to put a longer-than-ex­pec­ted primary battle be­hind her, former Sec­ret­ary of State Hil­lary Clin­ton (D) is no longer go­ing on the air in up­com­ing primary states. “Team Clin­ton hasn’t spent a single cent in … Cali­for­nia, In­di­ana, Ken­tucky, Ore­gon and West Vir­gin­ia, while” Sen. Bernie Sanders’ (I-VT) “cam­paign has spent a little more than $1 mil­lion in those same states.” Meanwhile, Sen. Jeff Merkley (D-OR), Sanders’ "lone back­er in the Sen­ate, said the can­did­ate should end his pres­id­en­tial cam­paign if he’s los­ing to Hil­lary Clin­ton after the primary sea­son con­cludes in June, break­ing sharply with the can­did­ate who is vow­ing to take his in­sur­gent bid to the party con­ven­tion in Phil­adelphia.”

Source:
CITIZENS UNITED PT. 2?
Movie Based on ‘Clinton Cash’ to Debut at Cannes
2 days ago
WHY WE CARE

The team behind the bestselling "Clinton Cash"—author Peter Schweizer and Breitbart's Stephen Bannon—is turning the book into a movie that will have its U.S. premiere just before the Democratic National Convention this summer. The film will get its global debut "next month in Cannes, France, during the Cannes Film Festival. (The movie is not a part of the festival, but will be shown at a screening arranged for distributors)." Bloomberg has a trailer up, pointing out that it's "less Ken Burns than Jerry Bruckheimer, featuring blood-drenched money, radical madrassas, and ominous footage of the Clintons."

Source:
×