Why Obama Pretended He Can Take Economic Action


President Obama devoted his State of the Union address to the economy for a simple reason: Americans think he needs to spend more time talking about the economy. They think that because they lack a detailed understanding of the situation in Washington. Obama’s speech was an extended attempt to humor their naivete.

The basic underlying fact of the situation is that the economy is growing very slowly because Congressional Republicans have done everything in their power to apply the fiscal brakes to the recovery. Among macroeconomic forecasters, this is not a remotely controversial assertion but rather an obvious fact that they wearily plug into their models. “I regard the spending cuts of the last several years as just mad,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told the New York Times, “It delayed what would otherwise have been a quicker recovery.”

Disentangling the party’s underlying motives for this belief is nearly impossible. As the great cliché goes, it’s impossible to make a man understand something if his livelihood depends upon not understanding it, and the livelihood of the Republican Congress depends upon averting a rapid recovery under Obama. Conservative intellectuals have proven capable of forcing the party to adjust policy positions that have hurt Republicans in recent elections. The House GOP’s policy of anti-stimulus has helped the party, and, despite the growing evidence against expansionary austerity, there is simply no energy whatsoever on the right to rethink it.

A completely honest Obama speech about the economy would concede that he is nearly helpless to spur economic growth given the need to obtain consent from a Congressional party whose political interest lies in thwarting it. But he would be an idiot to say that. Americans tend to hold Obama accountable even for the actions of Congressional Republicans that lie beyond his control. (Many influential pundits do, too.) They equate the amount of time Obama devotes to talking about economic policy with his commitment to economic policy.

And so Obama is reduced to pretending the giant elephant in the room does not exist. His speech tonight offered a series of familiar, worthy economic reforms that Republicans will not pass, as he has done in previous speeches. The new twist on tonight’s speech is that Obama vowed unilateral executive action whenever possible. The trouble is that there aren’t many places this is possible. The president has very few unilateral economic powers, and his ideas, while worthy, amount to small demonstration projects – lifting the minimum wage for a couple hundred thousand federal employees, open a demonstration manufacturing center here, award $100 million there – in the wan hope that somehow or someday they will catch on.

Obama does have enormous unilateral power over climate change, where his administration is formulating new regulations on existing power plants. But Obama referred to those regulations only elliptically, because, even though regulating greenhouse gas emissions is popular, spending a lot of rhetorical time on a non-economic priority is not popular.

Obama’s greatest political puzzle, for the entire duration of his presidency, has been the ability of conservatives in Congress to block recovery proposals while foisting the blame for the consequences onto him. He’s tried to crack this many times, with little success. The main solution available to him is for the economy to recover without much help from Washington. In the meantime, his best course of action is simply to talk about plans to help the economy as much as he can.