THE BLOG
08/04/2013 10:24 pm ET Updated Oct 04, 2013

Obama, the Economy and the Movement

The latest figures on the economy make it all too clear that we are stuck in a feeble recovery that could go on for several years to come. Growth was only 1.4 percent in the first half of 2013, and the economy is still creating too few jobs to increase worker earnings, which actually declined in July.

So what's the cure, and what might be done, given Republican obstructionism?

Start with interest rates. They need to stay very low. It's clear that the Federal Reserve jumped the gun, with Chairman Bernanke saying in June that our central bank might reduce bond purchases soon -- and then having to walk it back.

The economy is still far too weak to tolerate higher interest rates. The Fed needs to keep the monetary spigots wide open for the foreseeable future.

It's also clear that the Sequester is fiscal madness. The Congressional Budget Office last year warned that the increase in payroll taxes coupled with the $85 billion Sequester would cut the growth rate for 2013 in half. That's happening. Instead of furloughing public employees, the government should be adding new public jobs.

Obama's tour to promote a recovery from the "middle out" is a good start, but there is nothing in his agenda that would fundamentally change the pitifully slow recovery. His proposed grand bargain on taxes would cut the corporate tax rate in exchange for closing loopholes, yielding net new revenues in the short run but no new revenue over time.

Instead, we need corporations to start paying their fair share. The claim that corporate America is over-taxed is nonsense. For Obama to embrace this idea plays once again to right-wing ideology.

So, what to do to end the blockage? There are some things that Obama could do, and other things that we need to do.

The Republicans will obstruct any legislative initiative to restore an economy of broad prosperity. So it's necessary both to make their obstructionism bad politics and to use the power of the presidency until the legislative equation changes.

For starters, the president has a great deal of executive power that he hasn't used. One example is the power to set the terms of government contracts.

During World War II, President Roosevelt denied war production contracts to any employer who tried to bust unions. In the 1960s, before there were the votes to pass civil rights legislation, Presidents Kennedy and Johnson issued executive orders requiring government contractors to end racial discrimination in hiring and promotion.

President Obama could issue orders requiring government contractors to pay decent wages and not to interfere with workers' legal right to unionize. And now that the Senate has finally confirmed his appointees to the National Labor Relations Board, the NLRB could take a much tougher stance against illegal union busting.

The president could stop proposing trade deals that make it easier for industry to outsource and to evade labor and environmental regulations by moving offshore. Social standards should be part of all trade deals.

Obama, who tends to dislike partisanship, needs to become a better partisan in order to be a more effective president. He should make it even clearer what stands between us and a strong recovery -- Republican obstruction on the budget. He should send up legislation for much more substantial public investment, and then lead the attack on the obstructionist Republican House, Harry Truman style.

Obama famously declared in his 2004 keynote address to the Democratic National Convention that there is no red state America, or blue state America, but only the United States of America. He should admit that he was wrong. Thanks to gerrymandering and the fact that Republicans have at least 190 safe House seats, nothing that Obama can say or do will move those Republicans members of Congress to stop obstructing the recovery. But even so, that leaves 245 other House seats. And there are enough swing seats currently held by Republicans that a compelling stance by the president could split the right and take back the House for the Democrats.

And if we are to reclaim a politics of broad prosperity, what we do on the ground is at least as important as what the president does. In that respect, the most hopeful development in years is the spate of one-day strikes by minimum-wage fast food workers demanding a living wage.

This movement is spreading. It's telling that corporate America doesn't have the nerve to fire these workers.

There are now tens of millions of Americans earning too little to live in minimal decency. The society, on average, is richer than ever, but too much of the national wealth and income is going to the top.

Obama said as much in his July 24 address at Knox College.

What's needed is not just presidential rhetoric but a mass social movement to press for decent wages. The Occupy movement was a start, but it was a protest without a program. The movement for a $15 minimum wage is a protest connected to a politics. As it grows, this movement can create a tailwind for presidential leadership and isolate the Republicans as the party of privilege.

For three decades, this society has been dividing into haves and have-nots. Yet the struggles of ordinary people have been weirdly disconnected from our politics. Democrats express an economic populism when their backs are to the wall, but our Democratic presidents tend to get captured by economic elites.

Rebuilding the economy from the middle out is a start. Even better would be rebuilding it from the bottom up.

Robert Kuttner's new book is Debtors' Prison: The Politics of Austerity Versus Possibility. He is co-editor of The American Prospect and a senior Fellow at Demos.

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