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
Add to Briefcase
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 »
24% GOOD ENOUGH FOR FIRST PLACE
Macron, Le Pen Lead French Elections
1 hours ago
THE LATEST

"Centrist Emmanuel Macron and far-right politician Marine Le Pen led the first round of voting in France’s presidential election, according to early projections, as voters redrew the political map, placing the European Union at the center of a new political divide. Projections by the Kantar-Sofres polling firm showed Mr. Macron on track to win the first round with about 24% of the vote, ahead of Ms. Le Pen with nearly 22%." The vote marks the end of the country's dominance by conservative and socialist parties. The top vote-getters head to a runoff on May 7.

Source:
MENDING FENCES?
Trump to Deliver Keynote for Holocaust Memorial Event
1 hours ago
THE DETAILS

President Trump will deliver the keynote address for at the National Holocaust Museum's National Day of Remembrance ceremony on Tuesday. He'll speak from the Capitol Rotunda. The move is likely an effort to try to mend fences with Jewish groups. In January, "the White House ignited controversy when it didn't mention Jews or anti-Semitism in a statement on International Holocaust Remembrance Day." And certain members of his inner circle are still suspected of harboring white supremacist or anti-Semitic views."

Source:
MAY NOT SIGN BUDGET BILL WITHOUT IT
Trump Issues Threat on Border Wall Funding
1 hours ago
THE LATEST

"President Trump and his top aides applied new pressure Sunday on lawmakers to include money for a wall on the U.S.-Mexico border in a must-pass government funding bill, raising the possibility of a federal government shutdown this week. In a pair of tweets, Trump attacked Democrats for opposing the wall and insisted that Mexico would pay for it “at a later date,” despite his repeated campaign promises not including that qualifier. And top administration officials appeared on Sunday morning news shows to press for wall funding, including White House budget director Mick Mulvaney, who said Trump might refuse to sign a spending bill that does not include any."

Source:
DOCUMENTS OBTAINED BY U.S. INTEL
Putin-Linked Think Tank Developed Plan to Influence U.S. Election
4 days ago
THE LATEST

A Russian government think tank run by Putin loyalists "developed a plan to swing the 2016 U.S. presidential election to Donald Trump and undermine voters’ faith in the American electoral system." Two confidential documents from the Putin-backed Institute for Strategic Studies, obtained by U.S. intelligence, provide "the framework and rationale for what U.S. intelligence agencies have concluded was an intensive effort by Russia to interfere with the Nov. 8 election."

Source:
HELPED WIN FISA APPROVAL
FBI Relied on Dossier Allegations to Monitor Page
5 days ago
THE LATEST

"The FBI last year used a dossier of allegations of Russian ties to Donald Trump's campaign as part of the justification" to monitor Carter Page, who was then a defense adviser to the Trump campaign. "The dossier has also been cited by FBI Director James Comey in some of his briefings to members of Congress in recent weeks."

Source:
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login