The only politically viable action big and immediate enough to move the needle would be an extension of a payroll tax cut, which Fair predicted would boost the economy enough to add 1.6 percentage points to Obama’s electoral margin.
“The thing Obama doesn’t have going for him . . . is that he doesn’t have any real strong growth quarters,” he said, adding that “2012 is really critical. It does truly matter what the per-capita growth rate is in the next three quarters.”
Yet Obama doesn’t have many levers to pull. Few of the proposals he laid out Tuesday night — tax reform, expanded job training, infrastructure investments, energy-saving incentives for manufacturers, a home-refinancing plan — would jolt the economy before November.
And in any case, Congress is unlikely to pass many of them.
“The ideas may be good, but the ability we have to achieve the objectives is limited,” said Robert Reischauer, president of the Urban Institute and a former Congressional Budget Office director.
Other factors that are largely out of the president’s control — such as a spike in oil prices, the conflict with Iran or a new chapter in the European sovereign debt crisis — could deal setbacks to the U.S. recovery. On Tuesday, the International Monetary Fund slashed its forecast for global economic growth, although it left its prediction for U.S. growth unchanged at an anemic 1.8 percent.
Still, against the odds, Obama is making the campaign about the economy, casting his proposals as a matter of “fairness” — a word he used at least seven times Tuesday.
“We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by,” he said, “or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules. What’s at stake are not Democratic values or Republican values, but American values. We have to reclaim them.”
Jeff Shesol, a partner at West Wing Writers, a speechwriting and strategy firm, said: “We keep hearing about how populist these themes are . . . as though talking about economic opportunity is some left-wing obsession. This is as American an idea as you could come up with. This is a broadly popular belief system. When he talks about fairness, about opportunity, he’s occupying the center ground.”
The release of GOP presidential candidate Mitt Romney’s tax returns, showing that he paid an effective rate of just 13.9 percent on more than $20 million in income in 2010, played right into Obama’s theme, highlighting the low tax rates that many of the wealthiest Americans pay. Obama proposed ending all tax deductions, including those for mortgages and health care, for people who earn more than $1 million a year.
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