President Barack Obama addresses a joint session of Congress
What is the White House's political strategy for the 2012 election and what does the president's speech tell us about it? Prior to the speech, Ezra Klein wrote:
The White House believes two things about the next 14 months in American politics: With more than a year to go before the election, they can’t simply stop governing and start campaigning. That means that whatever they propose needs to attract bipartisan support. But with barely more than a year to go before the election, they can’t pretend the campaign doesn’t matter. That means whatever they propose needs to help win over the independents who will decide the election.
This sounds like gobbledygook to me. What does the White House mean by “governing”? A Republican House essentially guarantees that meaningful “governance” will not happen through the legislative process. Sure, some smaller measures might garner support (and hopefully some important measures, such as extension of unemployment benefits). Some consider extension of payroll tax cuts a significant measure. I’m not one of those people. I don’t believe that measure spurs job creation—which is dependent on demand, not tax breaks. I think former Treasury Secretary Paul O’Neill put it best:
[I]t seems patently unrealistic to me to urge people to spend money unless there's a demand that they're not able to satisfy with their existing resources. [. . .] Why would you? I mean, it's crazy. It's not a charitable function if you're running a business to say oh, my goodness, we have so many millions of people unemployed, I should rush out and spend my cash and hire more people if there's no demand for the goods. It's crazy to me.
Companies aren’t avoiding hiring because of tax burdens. They are not hiring because of a lack of demand. Cutting payroll taxes for employees may have a small stimulative effect, but at what cost? As opposed to unemployment benefits, extension of the payroll tax cut should be viewed as a political proposal, not a policy proposal. The question is, does it provide a political benefit? I’m unsure and wary that spending cuts will be demanded in exchange—which would be a bad policy tradeoff.
Other aspects of “governing” that do not require legislative action can be beneficial both as a matter of policy and politics. The president touched on one of these in his speech:
My administration can and will take some steps to improve our competitiveness on our own. For example, if you're a small business owner who has a contract with the federal government, we're going to make sure you get paid a lot faster than you do now. We're also planning to cut away the red tape that prevents too many rapidly-growing start-up companies from raising capital and going public. And to help responsible homeowners, we're going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent. I know you guys must be for this because that's a step that can put more than $2,000 a year in a family's pocket, and give a lift to an economy still burdened by the drop in housing prices. [Emphasis supplied]
Some of this is good policy and good politics. And it may tell us some good things about the White House’s actual political strategy for the 2012 election, as opposed to what they may seek people to "report" about the White House's political strategy. Let’s discuss this on the flip.
Ezra Klein wrote:
As the administration sees it, both [governing now and wooing independents] point toward the same sort of plan: a package of job-creation ideas that are thoroughly bipartisan and clearly popular, and a package of deficit-reducing offsets that show that they are willing to make hard choices, and even anger members of their own party, in the name of fiscal discipline.
Saying words about reducing the deficit in the long term does not bother me. It does if it concentrates on offsetting stimulus measures with cuts in current spending.
It also misses a huge opportunity—explaining that the best deficit reduction measure is job creation. Indeed, this has been the biggest hole in the political rhetoric of the White House specifically, and Democrats generally, for the past 2 years. This error may have stemmed from a political miscalculation in the run up to the 2010 election—the belief that Democrats needed to declare a policy victory, as opposed to policy progress, on the stimulus—to wit, Recovery Summer and the disastrous pivot to deficit reduction.
The second “big speech” the president is planning will be on deficit reduction. Again, from Ezra Klein:
Getting less attention in the media is the follow-up speech the White House is planning, which will lay out a specific deficit-reduction agenda that not only meets the $1.5 trillion goal of the “supercommittee,” but exceeds it and pays for the new jobs spending. These proposals will look quite similar to the grand bargain the White House offered Speaker John Boehner, and liberal groups are grimly preparing for the administration to call for raising the Medicare eligibility age.
If the president does not leverage deficit reduction as a job creation issue, he will be missing a political opportunity. It is a simple yet powerful idea—the best way to reduce the deficit is to get America back to work. The president can and should sell this idea. Consider, for example, Ezra’s idea with regard to the supercommittee on deficit reduction:
Why stop with a speech? The leverage the White House currently has over this process is that they can veto whatever the supercommittee produces, if it indeed produces anything. If they do that, the trigger gets pulled, and the White House assures us that both parties are terrified of the trigger. So what I’m waiting to see Thursday is whether the president says he will veto any plan that addresses deficits while ignoring joblessness.
Ezra is on to something here. But veto threats are not likely the best political tool. Here is my thinking on how to win reelection in bad economic times—pin the blame on the other guys. Sure, you say, but how?
Here’s how—show you care (speeches matter). Show you are doing something (announcing things you are doing). Show you are proposing things for the other guys to do. Show that the other guys are not doing anything good.
I thought the president’s speech was successful in all these areas. First, the president’s tone and rhetoric on jobs was outstanding. It reminded me of how Obama spoke during the 2008 general election campaign. Here are some of the highlights for me:
Tonight we meet at an urgent time for our country. We continue to face an economic crisis that has left millions of our neighbors jobless, and a political crisis that has made things worse. This past week, reporters have been asking "What will this speech mean for the President? What will it mean for Congress? How will it affect their polls, and the next election?"
But the millions of Americans who are watching right now: they don't care about politics. They have real life concerns. Many have spent months looking for work. Others are doing their best just to scrape by — giving up nights out with the family to save on gas or make the mortgage; postponing retirement to send a kid to college.
Message—I care. Yes, I “feel your pain.” Much better than “Recovery Summer.”
The next message—I’m doing something:
My administration can and will take some steps to improve our competitiveness on our own. For example, if you're a small business owner who has a contract with the federal government, we're going to make sure you get paid a lot faster than you do now. We're also planning to cut away the red tape that prevents too many rapidly-growing start-up companies from raising capital and going public. And to help responsible homeowners, we're going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent. I know you guys must be for this because that's a step that can put more than $2,000 a year in a family's pocket, and give a lift to an economy still burdened by the drop in housing prices.
I’m not a big fan of all the policy in that, but politically, it works—it shows “I’m doing something.”
The next message—I’m proposing stuff for the “other guys” to do:
Those of us here tonight can't solve all our nation's woes. Ultimately, our recovery will be driven not by Washington, but by our businesses and our workers. But we can help. We can make a difference. There are steps we can take right now to improve people's lives.
I am sending this Congress a plan that you should pass right away. It's called the American Jobs Act. There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that's been supported by both Democrats and Republicans -– including many who sit here tonight. And everything in this bill will be paid for. Everything.
The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working. It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed. It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and if they hire, there will be customers for their products and services. You should pass this jobs plan right away.
Again, I’m not a big fan of all of the policy in that excerpt, but politically, it works. It says, “Here is what the other guys need to do.” Nothing is going to happen in my opinion. It is a political statement, not a policy statement. It permits the president and Democrats to argue in 2012 that if “the other guys” had done something, the following would have happened:
Pass this jobs bill, and starting tomorrow, small businesses will get a tax cut if they hire new workers or if they raise workers' wages. Pass this jobs bill, and all small business owners will also see their payroll taxes cut in half next year. If you have 50 employees making an average salary, that's an $80,000 tax cut. And all businesses will be able to continue writing off the investments they make in 2012.
Pass this jobs bill, and we can put people to work rebuilding America. Everyone here knows that we have badly decaying roads and bridges all over this country. Our highways are clogged with traffic. Our skies are the most congested in the world.
[. . .]There are private construction companies all across America just waiting to get to work. There's a bridge that needs repair between Ohio and Kentucky that's on one of the busiest trucking routes in North America. A public transit project in Houston that will help clear up one of the worst areas of traffic in the country. And there are schools throughout this country that desperately need renovating. How can we expect our kids to do their best in places that are literally falling apart? This is America. Every child deserves a great school -– and we can give it to them, if we act now.
[. . .] Pass this jobs bill, and thousands of teachers in every state will go back to work. These are the men and women charged with preparing our children for a world where the competition has never been tougher. But while they're adding teachers in places like South Korea, we're laying them off in droves. It's unfair to our kids. It undermines their future and ours. And it has to stop. Pass this bill, and put our teachers back in the classroom where they belong.
Pass this jobs bill, and companies will get extra tax credits if they hire America's veterans. We ask these men and women to leave their careers, leave their families, risk their lives to fight for our country. The last thing they should have to do is fight for a job when they come home.
[. . .] Pass this jobs bill, and companies will get a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job. [. . .] Pass this jobs bill, and the typical working family will get a fifteen hundred dollar tax cut next year. Fifteen hundred dollars that would have been taken out of your pocket will go into your pocket.
This is the American Jobs Act. It will lead to new jobs for construction workers, for teachers, for veterans, for first responders, young people and the long-term unemployed. It will provide tax credits to companies that hire new workers, tax relief to small business owners, and tax cuts for the middle-class.
"Here is what we want to do," says the president—create jobs. And when Republicans don’ t? That’s when you say “the other guys” did not help us to create jobs.
But a speech is just the start. And pitfalls exist along the way. It is one thing to call for Medicare “reform.” It is another to call for raising the Medicare eligibility age. That would be politically disastrous. I hope someone in the White House has better sense than that. We’ll see.
In short, I think the president got off to a good start politically with his speech. (I think policy has to wait until after the 2012 election and I’m not convinced the White House does not know that, even though they can not say that.) What comes after is the next critical question.