White House Debates Fight On Economy

WASHINGTON — As the economy worsens, President Obama and his senior aides are considering whether to adopt a more combative approach on economic issues, seeking to highlight substantive differences with Republicans in Congress and on the campaign trail rather than continuing to pursue elusive compromises, advisers to the president say.

Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. These include free trade agreements and improved patent protections for inventors.

But others, including Gene Sperling, Mr. Obama’s chief economic adviser, say public anger over the debt ceiling debate has weakened Republicans and created an opening for bigger ideas like tax incentives for businesses that hire more workers, according to Congressional Democrats who share that view. Democrats are also pushing the White House to help homeowners facing foreclosure.

Even if the ideas cannot pass Congress, they say, the president would gain a campaign issue by pushing for them.

“The president’s team puts a premium on being above the partisan fray, which is usually the right strategy,” said Senator Charles E. Schumer of New York, the No. 3 Democrat in the Senate. “But on this issue, when he knows what the right thing to do is, and when a rather small group on one side is blocking any progress, you have to be willing to call that group out if you want to get anything done.”

Dan Pfeiffer, the White House director of communications, said that there was no internal debate. “The president’s first priority is to work with Republicans and Democrats to grow the economy, create jobs and reduce the deficit, but if the Republican House continues its ‘my way or the highway’ approach, he will make sure the public knows who is standing in the way and why.”

The issue is being framed by the 2012 election. Administration officials, frustrated by the intransigence of House Republicans, have increasingly concluded that the best thing Mr. Obama can do for the economy may be winning a second term, with a mandate to advance his ideas on deficit reduction, entitlement changes, housing policy and other issues.

Mr. Obama plans to spend time this weekend considering his options, advisers said. The White House expects to unveil new job-creation proposals in early September.

The ailing economy, barely growing at the same pace as the population, has swept all other political issues to the sidelines. Twenty-five million Americans could not find full-time jobs last month. Millions of families cannot afford to live in their homes. And the contentious debate over raising the federal debt ceiling — which Mr. Obama achieved only after striking a compromise with Republicans that included a plan for at least $2.1 trillion in spending cuts over 10 years — has further shaken economic confidence.

Republicans contend that the Obama administration has mismanaged the nation’s recovery from the 2008 financial crisis. Mr. Obama’s political advisers are struggling to define a response, aware that their prospects may rest on persuading voters that the results of the first term matter less than the contrast between their vision for the next four years and the alternative economic ideas offered by Republicans.

So far, most signs point to a continuation of the nonconfrontational approach — better to do something than nothing — that has defined this administration. Mr. Obama and his aides are skeptical that voters will reward bold proposals if those ideas do not pass Congress. It is their judgment that moderate voters want tangible results rather than speeches.

“If you’re talking about a stunt, I don’t think a stunt is what the American people are looking for,” the White House press secretary, Jay Carney, told reporters on Wednesday. “They’re looking for leadership, and they’re looking for a focus on economic growth and job creation.”

A wide range of economists say the administration should call for a new round of stimulus spending, as prescribed by mainstream economic theory, to create jobs and promote growth. It is clear that the House would never pass such a plan.

But Christina Romer, who stepped down last year as the chairwoman of the president’s Council of Economic Advisers, said Mr. Obama should fight for short-term spending in combination with long-term deficit reduction.

“Playing it safe is not going to cut it,” said Ms. Romer, a professor of economics at the University of California, Berkeley. “Not proposing anything bold and not trying to do something to definitively deal with our problems would mean that we’re going to have another year and a half like the last year and a half — and then it’s awfully hard to get re-elected.”

But there is little support for such an approach inside the administration. A series of departures has left few economists among Mr. Obama’s senior advisers. Several of his political advisers are skeptical about the merits of stimulus spending, and they are certain about the politics: voters do not like it.

Mr. Plouffe and Mr. Daley share the view that a focus on deficit reduction is an economic and political imperative, according to people who have spoken with them. Voters believe that paying down the debt will help the economy, and the White House agrees, although it wants to avoid cutting too much spending while the economy remains weak.

As part of this appeal to centrist voters, the president intends to continue his push for a so-called grand bargain on deficit reduction — a deal with Republicans to make even larger spending cuts, including to the social safety net, in exchange for some revenue increases — despite the strong opposition of Congressional Democrats who want to use the issue to draw contrasts with Republicans.

Administration officials say that their focus is on a number of smaller programs that could benefit the economy, a theme Mr. Obama has emphasized in his recent speeches.

“We know there are things Congress can do, right now, to get more money back in your pockets, get this economy growing faster and get our friends and neighbors back to work,” Mr. Obama said on Saturday in his weekly address.

On Aug. 5, in a move that went virtually unnoticed amid the clamor over a rating agency’s downgrading of United States debt, the administration announced a new jobs program for veterans returning from Iraq and Afghanistan. Mr. Obama called it a “reverse boot camp,” intended to retrain veterans for civilian jobs. Part of the program would include a “returning hero tax credit” for companies that hire unemployed disabled veterans.

The administration may also merge the Department of Commerce, the Office of the United States Trade Representative and some economic divisions at the State Department into a new agency, administration officials said. Possible names include the Department of Jobs or the Department of Competitiveness.

This focus on the little things is painful for many Democrats who see big problems, but there is growing acceptance that there may be no alternative to waiting for the next election.

“I’m as frustrated as everybody else on the planet both with where we are and with the response,” said Sarah Rosen Wartell of the Center for American Progress. “But I was reflecting on how difficult a hand they were dealt and how limited the options are.”

“If the other side has demonstrated an unwillingness to be a party to a compromise,” she added, “then you’ve got to lay out your vision as clearly as possible and make your case for it to the public.”

via nytimes.com

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