As Barack Obama was sworn in as president in 2009 he inherited the greatest economic crisis since the Great Depression. To combat this crisis and stimulate the American economy on February 19th President Obama signed into law H.R.1 or the American Recovery and Reinvestment Act of 2009. The Recovery Act has three immediate goals: create new jobs and save existing ones; spur economic activity and invest in long-term growth; foster unprecedented levels of accountability and transparency in government spending. The final version of the bill totals $787 billion in spending and tax cuts over the period of 2009-2019.
Now, almost nineteen months have passed since the Recovery Act was signed; the economic recovery is stalling and the benefits of the Act are being questioned by conservatives and others. According to the “Congressional Budget Office (CBO) report”:http://www.cbo.gov/ftpdocs/117xx/doc11706/08-24-ARRA.pdf from April 2010 through June 2010 the Act has raised real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent, lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points, and increased the number of people employed by between 1.4 million and 3.3 million. The CBO also expects the effects of the Recovery Act on output to gradually diminish during the second half of 2010 and beyond.
Outgoing chair of the Council of Economic Advisors, Christina Romer said in a speech recently, “The only surefire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less. In my view, we should be moving forward on both fronts.” Ms. Romer’s comments are leading many to ask about a second economic stimulus package to which White House spokesman Robert Gibbs has said that there are no plans for a “big new stimulus plan” to stimulate the stalled economy.
WATCH ‘HARDBALL’ COVERAGE OF PRESIDENT OBAMA’S AGENDA:
The president said this past Monday, “My economic team is hard at work identifying additional measures that could make a difference in both promoting growth and hiring in the short term and increasing our economy’s competitiveness in the long term…” In anticipation of challenges from Republicans such as John Boehner (R-OH) who characterize additional economic stimulus as the “spending spree in Washington” that has “run unabated” and House of Representatives Majority Leader Steny Hoyer’s (D-MD) discussion of “spending fatigue”, how can the Obama administration sell this idea to the American people?
First, don’t call it a “Stimulus Package” or “Second Recovery Act”. If the Republicans can sway public opinion away from policy with super-negatives such as turning “climate change” into “global warming”, the “estate tax” into the “death tax”, and “tax relief” into “tax cuts”; the Democrats can use “crafted talk” to turn the public towards beneficial policy with super-positives such as “Economic Revitalization”.
Second, explain to the American people very simply and repeatedly how this problem was created and why the conservatives approach will drive the bus back into the ditch. Ms. Romer was correct when she stated, “The current recession has been fundamentally different from other postwar recessions…It is a recession born of regulatory failures and unsound practices that contributed to a housing bubble and eventually a full-fledged financial crisis.” Many of the people who are criticizing the administrations economic response are the same people who supported the policies that caused the problem. The president and other members of his administration should call these people out by name, cite examples in their own words, and force those in opposition to defend their hypocritical positions.
Third, connect the dots. Don’t be afraid of the current political environment. If the Recovery Act has created jobs and increased GDP then highlight that data and tie it to the concern about the deficit and the debt. Demonstrate why that concern is being exaggerated. The administration should take control of the debate and not allow the opposition to define the issues. Play to win, don’t play not to loose.
Fourth, take the “Recovery Act” out of the abstract and make it real. Again, connect the dots by highlighting some of those 1.4 million and 3.3 million people who have been put back to work, some of those who have “recovered” and demonstrate how by becoming gainfully employed tax paying citizens they are “stimulating” the economy not draining it. Demonstrate how their tax dollars will help to pay down that debt. Some Econ 101 will go a long way in supporting the president’s position.
The president needs to be less political and more practical.