The president’s first objective is to elaborate the economic progress that’s occurred over his watch. That progress is real, it’s significant, and there’s no question that the fingerprints from policies he initiated in his first term—when he could, you know, pass stuff—are all over these results.
His second task is less enviable. He must admit, as he did Thursday, that while all the stats under point one are on the books, baked in the cake, and here to stay, not nearly enough of the growth has reached the middle class, the working class, or the poor.
Third, he must connect the first two points by explaining the policy architecture—the “glue,” if you will—that would reconnect the living standards of average Americans to the growth in the overall economy, if only Congress would work with him. A subtheme here is the fact that obstructionists in Congress are not just blocking him, but standing between the middle class and more broadly shared prosperity.
He did all of the above Thursday, as I’ll explain in a moment. But I’d like to go a bit further and both evaluate the president’s economic record and think about what may be coming.
On the gains made thus far, the president was firm and clear about our economic progress:
…when I took office, businesses were laying off 800,000 Americans a month. Today, our businesses are hiring 200,000 Americans a month. The unemployment rate has come down from a high of 10% in 2009, to 6.1% today. Over the past four and a half years, our businesses have created 10 million new jobs – the longest uninterrupted stretch of private sector job creation in our history. Right now, there are more job openings than at any time since 2001. All told, the United States has put more people back to work than Europe, Japan, and every other advanced economy combined.
Importantly, he also emphasized benefits associated with health care reform, benefits that are particularly meaningful to middle and lower-income families: “If your family gets your health care through your employer, premiums are rising at a rate tied for the lowest on record.” That’s a very big deal.
He then stressed point #2:
Our broader economy has come a long way, but the gains of recovery aren’t yet broadly shared. We can see that homes in our communities are selling for more money, and that the stock market has doubled, and maybe the neighbors have new health care or a car fresh off an American assembly line. And those are good things. But the stress that families feel – that’s real, too. It’s still harder than it should be to pay the bills and put some money away. Even when you’re working your tail off; it’s harder than it should be to get ahead.
On the policy glue (point #3), he emphasized infrastructure investment, clean energy, universal pre-school, immigration reform, a higher minimum wage, gender pay equity, and more family friendly policies in the workplace.
You ask me, that’s some pretty good glue. But this three-tiered economic framing—1) strong overall progress, 2) not reaching the middle class, and 3) the policy framework to fix that—poses a real challenge. For many listeners, the fact of #2 makes #1 hard to hear. You can talk GDP and months-of-job-growth until you’re blue in the face, but if the vast majority aren’t feelin’ it in their paychecks, they’re unlikely to give you much credit.
And congressional gridlock makes #3 hard to swallow. How can voters judge the president’s economic agenda when anything he’s proposed since 2010 has been politically DOA?
So, coming up with an objective and fair grade for this president’s economy policy record thus far is tricky (full disclosure: I’m a former member of his economic team).
On macroeconomic stabilization, I think you have to give him high grades (of course, the Federal Reserve has played an important role as well). We tend to be a bit amnesiac about our economic past, but I’ll never forget the recessionary nightmare that greeted us as we took over the tiller in January 2009. In the first quarter of that year, employment fell by more than 2 million jobs. In the quarter before Obama took office (2008q4) real GDP tanked by over 8 percent. Yet by the middle of 2009, the economy was again expanding and with the exception of a rare hiccup, it has been growing ever since.
But while the poverty rate fell significantly last year for the first time since 2006, it’s still much higher than it was before the recession, and while some data suggest middle-class incomes are finally nudging up a bit, the living standards of most families do not begin to reflect the growth in the macroeconomy, corporate profits, or the stock market.
To his credit, this president has elevated the issues responsible for the economic disconnect—our historically high levels of inequality and our low levels of economic mobility/opportunity—more so than any other modern president.
But he has not been able to do much about them. He hasn’t been able to legislate the ideas ticked off above that would help reconnect growth and the middle class. A major exception, as noted, is health care reform, which will continue to increase access and lower the cost of health coverage to the middle class and the poor (at least in states that accepted the Medicaid expansion), thereby improving their economic security.
His only grade in that regard can be an incomplete…a big asterisk that takes you to a footnote that reads: “intense congressional gridlock since 2010 has blocked Obama’s economic agenda.”
In fact, he’s actually been able to achieve some gains for select groups of workers through rule changes (extending overtime eligibility; making it harder for firms with bad labor practices to get government contracts) and executive orders (a higher minimum wage for workers on government contracts; the new rules against tax inversions). But without Congress and its purse strings, he can’t reach the numbers he needs to.
And this, at the end of the day, is what matters most and it is what I mean by the need for a fourth message. I hope I’m wrong, but I fear that President Obama is unlikely to post many more points on the economic policy scoreboard. It is hard to imagine gridlock receding anytime soon. If anything, it may have to get worse before it gets better.
Yes, he and his team have to keep trying and I’m sure they will. But what may be even more important now is to explain to the American electorate the economic costs of dysfunction, the impossibility of running an advanced economy in this day and age with a federal system incapable of diagnosing problems and prescribing solutions. And that warning goes well beyond the economy, to existential issues like climate change.
His message cannot end with “here is the reconnection agenda.” It must proceed to: “here is why that agenda is so essential, so urgent, and why another two, four, eight years of dysfunction must not be our future. And it’s critical that you weigh these concerns when you consider who to send to DC to work with me and my successor.”
He may not be able to serve up the economics we need, but if he focuses on explaining the costs of dysfunction in ways people can understand, he might be able to set the table for the next president.