Obama Can't Do Squat to Help the Economy on His OwnBy
Early signals from the White House about Tuesday’s State of the Union speech indicate strongly that President Obama will focus on jobs and the economy, vital subjects conspicuously downplayed in his Jan. 21st inauguration address. The weeks since then have brought news that the economy unexpectedly contracted in the fourth quarter of 2012 and that the Great Recession continues to take a toll on millions of Americans. A Rutgers University study (PDF) released last week shows that 80 percent of Americans have lost a job, or have a friend or relative who has lost a job, in the last few years.
For Obama, the need to increase hiring and economic growth is a familiar challenge—so familiar that delivering these speeches must make him feel a lot like Bill Murray in Groundhog Day. There remains, as always, one all-important obstacle: Congress. Any stimulus measure to boost growth and create jobs must pass the Republican-controlled House, which is not only allergic to additional spending but primarily focused on imposing further cuts. Recognizing this reality, White House advisers told Bloomberg News that, rather than go through Congress, Obama will attempt to go around it—to “circumvent lawmakers through the use of presidential power.”
O.K., sounds promising. So are there executive actions that Obama can take that will meaningfully expand the economy and create new jobs? “No,” says Robert Shapiro, chairman of the economic advisory firm Sonecon and a former Undersecretary of Commerce in the Clinton administration. “These are big problems, large obstacles, big challenges. I don’t think there’s anything within the executive powers of the president that doesn’t require legislation and would have a measurable effect on jobs. He’s got to go through Congress.”
Well, surely the president can do something, can’t he? He’s the president, after all! “Oh, boy,” says Mark Zandi, chief economist at Moody’s Analytics. “There’s nothing I can think of that would let the president meaningfully turn the dial on jobs by himself.” After some thought, Zandi came up with approving the Keystone XL pipeline, scaling back environmental regulations, and possibly facilitating more mortgage-refinancing activity. “But all of these things are really on the margin,” he said.
One problem the White House will run into is that it’s been here before, encountered the same obstacles, and already pulled most of the levers at its disposal to help the economy without congressional consent. In October 2011, the White House unveiled its “We Can’t Wait” initiatives, a series of presidential actions in areas from housing to education. “When it became clear that Congress wasn’t going to move,” says Kenneth Baer, a former Obama official at the Office of Management and Budget, “we looked for every way we could find to act on our own to increase economic output and job creation.” There isn’t a lot left that the White House can do.
Obama’s best hope may be to try and stave off economic damage that has not yet occurred. Recently, he has also begun making the case that the automatic “sequestration” spending cuts set to take effect on March 1 should be delayed. Obama can’t do this on his own. But there is at least some sentiment among Republicans for revisiting the sequester cuts. “The sequestration, in terms of outlays for this year, winds up about $60 billion—if you consider the multipliers, it comes to about half a percent of [gross domestic product],” Zandi says. “If Obama could put off the sequestration for a year, push it all into 2014, that would increase GDP in 2013 by about a half a point. That would be meaningful. But of course, he needs Congress for that.”