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White House contemplates fighting stance on economy

Differences with GOP would be underscored

By Binyamin Appelbaum and Helene Cooper
New York Times / August 14, 2011

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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.

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, 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 number three 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.’’

The debate is being framed by the 2012 election. Administration officials, frustrated by the intransigence of House Republicans, have increasingly concluded that the best thing 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.

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 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.

Obama’s political advisers are struggling to define a response, aware that their prospects may rest on convincing 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.

Administration officials say that their focus is on a number of smaller programs that could benefit the economy, a theme 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,’’ Obama said yesterday in his weekly address.

White House officials have been saying that nothing dramatic is on tap.

“If you’re talking about a stunt, I don’t think a stunt is what the American people are looking for,’’ Jay Carney, the White House press secretary, told reporters 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 that the administration should call for a new round of stimulus spending, as prescribed by mainstream economic theory, to create jobs and spur growth.

It is clear the House would never pass such a plan. But Christina Romer, who stepped down last year as chairwoman of the president’s Council of Economic Advisers, said that Obama should fight for short-term spending in combination with long-term deficit reduction.

“Playing it safe is not going to cut it,’’ said 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 reelected.’’

But there is little support for such an approach inside the administration. A series of departures have left few economists among 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.