Missing: Obama's Economic Plan

President Barack Obama spent much of 2012 calling for "an economy built to last." His plea, however, didn't.

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Obama's second inaugural address contained the requisite broad-brush references to his priorities for the next four years: a strengthened middle class, improved equality, decisive global leadership, political pragmatism in Washington. As his second term begins, however, one thing missing from Obama's agenda is a clear plan for reviving a stagnant economy, a primary issue that dominated his first term.

Obama begins his second four years with a modest economic tailwind, especially compared with the tsunami he faced when he first took office in 2009. Back then, a brutal recession was near its nadir, with the economy shedding 500,000 jobs per month. Today, the economy is growing and employers are adding about 150,000 jobs per month. The housing market is finally recovering after a six-year bust. The stock market keeps drifting upward.

But it remains a lackluster economic performance, far weaker than the recoveries that followed earlier recessions. At current rates of growth, the unemployment rate won't drop to pre-recession levels until 2016 or later. Growth rates one to two percentage rates below the historical norm will worsen Washington's budget problems and force tax hikes and spending cuts that come sooner and hurt more than they would otherwise. The competitive position of the U. S. economy may continue to erode.

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Obama's economy-built-to-last program involved a lot of traditional spending on roads, bridges and other types of infrastructure, with more federal funding to hire teachers and improve schools. It also called for government-backed investments in clean energy, innovation in the manufacturing sector and other pet projects.

As well-meaning as those ideas may have been, Obama proposed them knowing that they were highly unlikely to be approved by Congress, where House Republicans are skeptical of conventional stimulus spending and determined to curtail expenditures funded by more federal borrowing. It doesn't take much cynicism to conclude that Obama's economy was mostly a set of campaign talking points that have now outlived their usefulness.

So what is Obama's economic plan for the next four years? He hasn't really said yet. His second inaugural address contained references to reforming the convoluted tax code, protecting Social Security and Medicare, empowering citizens with modern skills and ensuring fair play. But those are flag-waving concepts every politician supports in theory. Simply talking about them does nothing to invigorate the economy.

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Obama also suggested he might pursue more of the government activism that hit a dead end in Congress during the last two years. He said in his inaugural address that "preserving our individual freedoms ultimately requires collective action," while calling for more road building, teacher training and scientific research. Nice concepts, but he had just one such program—$50 billion in fresh stimulus spending—batted down as part of the compromise deal to avert the "fiscal cliff." Obama didn't even seem to fight for it.

Obama still has time to present detailed economic proposals in his upcoming State of the Union address and in his proposed federal budget for 2014. But he also knows the next year or two will likely be dominated by battles that are already looming: extending the government's borrowing limit, cutting spending and tackling the national debt. Any economic proposals beyond those issues might simply get buried in Washington's political muck. Meanwhile, Obama seems to be shifting to other priorities, such as gun control legislation, immigration policy and ways to address climate change.

The economy can grow over the next four years even if Washington does nothing in particular to help. If there were some kind of deal to reduce the size of the national debt, that alone would probably boost the economy in the long run. Better still would be a more rational tax code with fewer special-interest giveaways and reforms to costly entitlement programs that make Medicare and Social Security more affordable for taxpayers. Obama has mentioned all these things, but we still don't know if he's serious enough about them to spend his political capital fighting for them. If he did, he might get his economy built to last after all.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.
http://www.usnews.com/news/blogs/rick-newman/2013/01/22/missing-obamas-economic-plan

[adgal]

It doesnt seem any of the candidates really came up with a strong solid plan did they?  Obama included in that.  Honestly, I sort of came to the conclusion that no one really knows what to do.  Lot's of theories and ideas, but no one can really agree on what needs to actually happen.  That seems to be the basis of the huge political divide in parties.  

The situation in the US is always a big topic in our agency lunch room.  I heard something the other day that resonated with me and am curious as to what you think.

This individual said that due to being frightened (the economy, the wars, etc. etc.), the US people in general have expectations on whomever their President is that are just not realistic.  They said it's human nature - they want their leaders to just fix it.  They are scared.  So really, it wouldn't have mattered who won in terms of popularity, because this problem is going to take a very long time to sort out.

It made sense to me.  I know that throughout history Presidents have had fans and foes, but if you look at the last two - Obama and Bush - it really does seem the love vs. hatred are far more extreme then in the past.  What do you think?

[nursegirl6572]

All excellent points.  I don't pay much mind to the campaign promises, as they all do that.  I'm anxiously awaiting the real proposals.  I'm hoping they will be well rounded, and address issues on BOTH sides....revenue AND spending.

I'm a little fearful that Obamacare, being his "baby" will occupy more time and money, with other important issues falling by the wayside.  I don't think a lot of people realize how HUGE of an undertaking it is to change our entire healthcare system.  He's probably going to need 3.5 of his 4 years to get everything working the way it's meant to.  

I'm remaining cautiously optimistic.  He needs to follow through with many things that he claims he couldn't..because he had to spend so much time on "clean up duty".  I'll easily give him, a year, year and a half was necessary to regroup and figure out how he was going to move forward...but at THIS point...these are his policies, and his ideas.  He gets recognition for the good things, as he should...people need to start holding him more accountable in the areas where he fell short.  Of course, that's unlikely to happen, but hey, a girl can dream!

[specialmom]

Yes I agree.  People don't just dislike the two of them, they loathe them.  I think our country is so much more divided than I ever remember by both of these two presidents making them both failures to me.  

I agree it is hard to know what direction to go in and how to make meaningful change.  

I'm really going to just hope and pray that a third party emerges.  I've become so fed up with die hard Democrats as much as die hard Republicans.  

[nursegirl6572]

It made sense to me.  I know that throughout history Presidents have had fans and foes, but if you look at the last two - Obama and Bush - it really does seem the love vs. hatred are far more extreme then in the past.  What do you think?

I agree completely...

We were typing at the same time, but I sort of said something similar.  That people as a whole need to hold him more accountable in some areas.  Yes, he is up againt a challenge when it comes to the economy...I sure hope he pulls resources that will help him devise a good plan....and would HOPE the politics could be set aside so they can get down to business.  It will never happen on either side..but that's what holds us up every single time.

[nursegirl6572]

I've become so fed up with die hard Democrats as much as die hard Republicans.   .

Amen, sister!

[adgal]

There does seem to be so much extremism on both sides doesn't there.  And the biggest problem with that is that those that are more middle ground and see the pro's and con's with each party - well their voices seem to get lost in it all.  That's a shame as the sense of balance gets lost. It's also a shame that whomever relates closest to the policies of either party begin to become lumped in with the extremists and that is so unfair.  In the "outside" world, all we seem to hear about is the die hard extremists, and they rarely make a whole lot of sense.  It portrays an unfair negative image.

[brice1967]

I'm not so sure that the problem has anything to do with the far left.  The left's guy is in charge right now and for the most part is doing what liberals have done for decades.  (Spend money and excuse it as essential while no reform is ever taking place....)  

There are some people who aren't as big on the President as they were in 08 and that was shown in the recent election amongst the popular vote.  The deal is though, most of the liberals won't say that they are displeased in any way, shape, form or fashion.  They sit still and let the fringe battle it out.

[specialmom]

What scares me about some people on the left and on the right both is that they are extreme and don't even realize this.  It's so normal to want to fight for their side that they can give up no ground.  It's really unfortunate for our country that it is like this.  

[brice1967]

I believe that is a very good analysis of the situation.  I know a couple of people who who've claimed to be "moderate" and are as far from it as can be.  

[adgal]

Extremism anything is always scary to me.  That's when the blinders come out and what is almost brain washing takes effect.  I see it happen with so many these days...heck that is what is behind terrorism, is it not?