President Obama will kick off a series of speeches on the economy Wednesday when he is expected to tout the real progress that’s been made, while insisting that additional reforms remain urgently necessary. The problem is that our remaining economic problems are all slow-motion crises that require more reform than this Congress is able or willing to take on.
While the GOP House speaker’s office has already criticized the president for making another speech, it’s really one of the only things Obama can do on his own.
The economy has made gradual but steady progress since the worst of the recession when the unemployment rate was at 10%. Hiring has picked up; retail spending is getting stronger; and the housing market is rebounding–all positive signs that Obama is expected to highlight as accomplishments of his presidency.
“The recovery is proceeding, and has been remarkably stable, despite the deluge of insults thrown at it, from the European debt crisis, to the Japanese earthquake, to the debt ceiling debacle, to the sequester,” said Justin Wolfers, an economist at the University of Michigan.
But overall GDP growth has remained limp, and the current 7.6% unemployment rate is still well above the pre-recession low of 4.4%. The sequestration’s across-the-board cuts have been a damper on the economy. Wages have remained stagnant. The long-term unemployed have yet to benefit from the recovery, and a growing percentage of Americans have given up looking for work entirely. The slowdown in China and elsewhere overseas hasn’t helped either.
The president’s renewed push arrives just as Congress gets ready to break for its month-long August recess. While he’s likely to press for Congress to rise above the squabbles that have consumed the headlines lately–the IRS’ targeting of political groups, for one–to address job creation and the economy, the GOP House has already been told by its leadership to return home with an explanation of how they’re “Fighting Washington for All Americans.”
“The president thinks Washington has largely taken its eye off the ball on the most important issue facing the country.” Dan Pfeiffer, senior adviser, said in an email this week.
The problem is that there’s very little that Obama can do on his own to help the economy right now. Unlike during the aftermath of the financial collapse, the biggest problems with the economy are now far-ranging, slow-motion crises that require a serious degree of bipartisan cooperation: Fixing a cumbersome tax code, overhauling entitlement programs that threaten our long-term fiscal health, and overhauling the labor market through immigration reform–all changes that require Congressional action. “There’s not any magic bullet out there,” said Doug Holtz-Eakin, president of the American Action Forum and former President George W. Bush’s Congressional Budget Office director. “The best things is to move toward a series of clearly needed fundamental reforms–entitlement, tax, immigration.”
Lowered bar: ‘Do no harm,’ is economists’ new hope for Washington Lawmakers could more easily address a few immediate obstacles to growth like sequestration and the fate of the long-term unemployed, if Congress and the White House could agree on legislation to reverse some of the cuts and, some suggest, provide incentives to train or hire those long unemployed. But neither problem has a sudden “cliff” to compel action in a fractious Congress that only feels compelled to act on the eve of an immediate crisis–and increasingly not even then. The situation has caused many economists and other analysts to set their expectations exceedingly low: They simply hope lawmakers avoid doing further damage to the economy through continued fiscal brinksmanship over the next round of budget and debt-ceiling votes arriving this fall. Obama will try to recruit the public’s support by setting his sights far higher, hoping Americans will see the administration as rising above the fray and without Congress’ addiction to 11th-hour crises. Yet, there’s the chance that his words will seem like ineffectual rhetoric given the current state of Congress. “If he successfully pulls off the above, as I suspect he will, folks will be reminded that at least someone in power is looking out for their interests,” said Jared Bernstein, an economist and former economic adviser to the Obama White House. “Since he can’t legislate anything that would help right now, there’s a risk that he looks hamstrung by gridlock.”
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