President Obama has been hammered for his uninspiring remarks amid Monday’s market crash and his relatively threadbare proposals for jumpstarting the economy – including extending the payroll tax cut and unemployment insurance and creating an infrastructure bank. But when the tables are turned and the experts are asked what Obama ought to be doing, their recommendations have more to do with style than substance.
Wall Street and the American people are looking for “the vision thing” and a path out of the economic doldrums, not a lot of political prattle about Triple A ratings, the debt ceilings and long term budget baselines, the experts say.
“Wall Street is in a funk because it knows the economy is in bad shape and sees no leadership in D.C, just a kindergarten with unruly kids hurling toys at one another,” said Princeton University political economy professor Uwe Reinhardt. “Sad, really.”
For sure, a panel of Fiscal Times budget and economic experts and columnists came up with a handful of measure that might help the stagnant economy and troubled markets. For example, they urged Obama to:
- Change his rhetoric on raising tax revenues by "taxing the rich, oil companies and corporate jet owners" to a broader focus on tax reform that lowers corporate and individual tax rates while still netting an increase in revenues by eliminating tax credits and deductions.
- Make a big push in Congress this fall to win ratification of trade agreements with South Korea, Panama and Colombia that could help to promote job creation in the U.S.
- Immediately begin setting the groundwork for a major overhaul of the three premier entitlement programs -- Social Security, Medicare and Medicaid – to slow the long-term costs of the federal retirement program and health care programs for the elderly and poor.
- Announce plans for a “Universal National Service,” which would require all young people between the ages of 18 and 26 to serve a minimum of two years either in the military or in a wide range of productive nonprofit endeavors – such as rebuilding infrastructure, helping the poor and elderly, and working in environmental protection projects.
- Give the Treasury additional policy-making authority, on taxes, Social Security and health care spending, to provide the administration with extra economic fire power.
But the experts more often than not urged Obama -- once the Great Communicator who catapulted into the White House with extraordinarily inspirational, clarion speeches -- to shake off his lethargy and rally the public to his side with speeches clearly spelling out his economic vision. Repeatedly calling on recalcitrant congressional Republicans to work with him on a “balanced” and “fair” deficit plan is a waste of time.
“This President is in trouble because he delegates major issues and, rightly or wrongly, is perceived as not leading until the very end,” said Charlie Kolb, president of the Committee for Economic Development. “He needs to lead, not punt. He needs to tell a narrative about what the country has been through and where it is going. People need a roadmap and a plan, not platitudes.”
are a “triple A nation” illustrates my
point. Unless they work in finance, most
people do not know what triple A means.”
Reinhardt agrees that Obama needs to find more creative ways to reach out to Americans and sell his budget and economic policies well before a new 12-member, bipartisan joint congressional committee begins haggling over $1.5 trillion of long-term savings. “As someone who has taught college undergraduates for decades and done likewise on the public speaking circuit, I am astonished and dismayed that absolutely no one in the White House seems to know even the basics of teaching, which is what a President in our current situation must do,” Reinhardt said. “Telling the American people that we are a “triple A nation” illustrates my point. Unless they work in finance, most people do not even know precisely what triple A means, and why we are a triple A nation, while Greece and Italy are not. That needs to be explained.”
All of the economists surveyed agreed that Obama needs to put forth one major economic proposal that he is able to enunciate clearly to the American people. Eugene Steuerle, a senior fellow at the Urban Institute and former Treasury official, said Obama needs to do something “simple and dramatic,” to ratchet confidence from consumers, business leaders, and lawmakers. “The President has to fight to achieve at least one major proposal that shows government is back on top of things,” he said. “The proposal has to be intuitively understandable by the public.”
Jay Bryson, a global economist at Wells Fargo, echoed Steuerle’s sentiments. “We know 12 people are supposed to meet in the fall to come up with $1.5 trillion in deficit reduction, but we have no idea what that’s going to look like—it’s one big question mark, and we seem to be adrift.” Bryson said. “The best thing Obama can do to restore confidence is work cohesively with Congress to say, ‘OK, we’re getting our fiscal house in order, and here are the steps that we’ll take to do it.’”
Fiscal Times correspondent David Francis has a different take on how Obama should handle the public relations side of the equation, saying that the president should limit television appearances in the coming months because his performances aren’t helping him with the markets. Francis said, “I was chatting with a bond trader in Chicago on Monday in advance of Obama’s speech who said, ‘I guarantee you the market will drop as soon as he starts speaking; it happens every time he gives one of these speeches.’”
He was right: the market immediately dropped 35 points as soon as the president began to talk and kept heading south. Obama was urging calm and bipartisan cooperation and said, “It’s not a lack of plans or policies that is the problem here. It’s a lack of political will in Washington.”
”He should stay out of the public eye for a while, letting other, more established Democrats take the public lead in debt reduction negotiations,” Francis said. “Obama could use this downtime to reflect on what kind of president he wants to be remembered as, especially with his re-election uncertain.”
Mother’s Day Resolution through Congress.”
University of Virginia political scientist Larry Sabato says that, with a hostile GOP-controlled House and falling approval ratings, “there’s not much Obama can do.”
“He’d have trouble getting a Mother’s Day resolution through Congress,” Sabato said. “His best political path is the one forged by the president he said he didn’t want to be like, Bill Clinton. Stymied by a GOP Congress,
Clinton used the Rose Garden brilliantly, proposing micro-programs and mini-ideas by the dozen in the mid-1990s. Clinton showed he was trying to do something to improve the situation each day, which probably kept his ratings higher than they would have been otherwise. “
Sabato’s suggestion: Obama could call for creation of a Universal National Service, an idea Sabato explored in his book, A Perfect Constitution. It would put all young people to work, restore the full concept of citizenship, teach employment and social skills, and create far more economic value for the nation than it costs to run.
G. William Hoagland, a former Senate Budget Committee staff director and one-time adviser to the Senate Republican Majority Leader, said tax code simplification could perhaps be the biggest economic game-changer the President could support.
“A simplified tax code could result in increased revenues while at the same time allocating resources to their most efficient economic purposes,” Hoagland said, citing quick phase out of the employer-sponsored health insurance deduction and capping the amount individuals can deduct on their mortgage interest as examples.
“Then he should demand fast action by the Senate on [Federal Reserve Board] confirmations, and no more Republican screwing around.”
Hoagland, Vice President for Public Policy at the CIGNA health insurance corporation, also recommended halting enactment of certain parts of the Dodd-Frank financial reform law and Obama’s health care law at least through 2013 to “provide greater certainty for employers during this rough patch the economy is experiencing.” (Hoagland stressed that he was not reflecting the views of his company.)
Fiscal Times columnist Bruce Bartlett, a former Reagan White House policy adviser, noted that at this point, the Federal Reserve Board “is the only game in town.” He said Obama could start by filling the two long-vacant seats on the board and make an effort to appoint people with creative ideas for using monetary policy to spur growth. “Then he should demand fast action by the Senate on confirmation and no more Republican screwing around,” Bartlett said.
Finally, June O’Neill, a former Congressional Budget Office Director, said that Congress and the President should begin talks before the joint committee sets up shop on overhauling entitlement programs – the biggest long-term drivers of government spending.
“Addressing the longer run should not wait for a committee,” she said. “The options for reining in Social Security, Medicare, and Medicaid have been analyzed by a number of excellent studies along with estimates of their effects on reducing the huge and potentially catastrophic future debt. Congress should hold hearings to help explain the proposed options to the public.”
