A young boy rides his bicycle on a street in North Philadelphia. (AP Photo/Dan Loh)
Today President Obama will give a major economic address in Illinois, the first in a series of speeches designed to refocus the national conversation on job creation and the struggling economy.
This is a mandate Obama gave himself—much of his re-election campaign last year was focused on economic recovery and specifically growing the economy “from the middle out,” a theme he will revisit today. It’s been a crazy year, with some expected distractions from the jobs debate, like immigration reform, and some unexpected ones, like a massive gun control fight and the NSA surveillance saga—but Obama is rightly returning to arguably the nation’s biggest immediate problem, the 22 million Americans who cannot find work and the sagging economic recovery.
The reflexive response by many mainstream media outlets is that the speech is rather pointless, since Congress—specifically, the Republican-controlled House of Representatives—won’t act on anything Obama proposes. But it’s crucial for Obama to set the table for the big debate that will happen this fall over the federal budget and the debt ceiling. Republicans are ready to push for severe cuts to domestic programs and the disabling of the Affordable Care Act, and the White House believes it needs a forceful and convincing counter-argument. Obama will begin making it today.
So it’s not “just a speech.” That said, if the president is serious about helping struggling Americans and combating unemployment, there is a lot he could also do without Congress, simply by executive order or federal agency action.
These measures won’t solve the unemployment crisis nor single-handedly rescue the economy, but they could help millions and would show that Obama is dead serious about helping those who need it.
Here’s what he could do:
Order fair treatment for private contractors. A study by Demos released in May found that nearly 2 million private sector workers on contract with the federal government are paid less than $12 per hour, and many also suffer under inadequate labor and safety protections. Congressional action would be required to comprehensively address the problem, but Demos noted that Obama could do quite a bit by executive order—with the stroke of a pen, he could order federal agencies to take all possible steps to ensure companies comply with relevant labor and employment laws. The study said such an order “has the potential to dramatically improve the lives of the low-wage workers that federal agencies depend on to accomplish their goals.”
There’s certainly a precedent for such an order—most famously, in 1965, President Lyndon Johnson signed Executive Order 11246, which mandated equal opportunity and affirmative action hiring for all companies working with federal contractors. And this is something the White House has already promised to do—back in 2010, The New York Times reported that Obama was “planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers.” That never happened, but it should now.
Order Treasury to allow refinancing of private mortgages. A crucial drag on the economy is the 11 million Americans who have mortgages that are underwater—meaning they owe more than the home is worth, and are trapped with a negative asset.
Obama has been trying to convince Congress to pass a refinancing plan that would allow underwater homeowners to take advantage of the historically low interest rates, but it’s gone nowhere. He has already issued an executive order allowing people with mortgages backed by the government-sponsored enterprises Fannie Mae and Freddie Mac to refinance, and if Mel Watt is confirmed as director of the Federal Housing Finance Agency, it’s possible that those same homeowners could enjoy principal reduction.
But few people know that, via executive order, Obama can extend refinancing opportunities to underwater homeowners with privately held mortgages as well. The Treasury Department’s Michael Stegman hinted at this possibility during a speech at the American Securitization Forum in January:
[W]e will also consider non-legislative means at our disposal to help responsible non-GSE homeowners access these low rates.
To be the most effective, as well as address investor concerns, the legislative route would be preferable to using existing Making Home Affordable program authority.
Legislation would facilitate a refinance, whereas under our existing authority, Treasury could only modify the most deeply underwater loans and pay investors for some amount of forgone interest.
Surely legislation would be preferable—but it’s not going to happen while Republicans control the House. With only his signature, Obama could extend a lifeline to potentially millions of Americans with underwater mortgages.
Executive order that expands food stamp participation. There are many programs designed to help struggling Americans that are suffering under the brutal budget battles in Congress, not to mention budget sequestration. But the Supplemental Nutrition Assistance Program isn’t one of them.
SNAP is an entitlement program, as defined by federal law, and so Congress doesn’t have a say in how much is spent via SNAP—it just sets the formula for eligibility.
Only about 75 percent of the people currently eligible for food stamps under SNAP actually apply, according to the US Department of Agriculture. If Obama could boost the program to near-full participation, not only would it help a lot of people who need aid but aren’t receiving it, but it would also provide a huge economic boost—every dollar spent on food stamps produces $1.84 in economic benefit.
How could Obama do this? Once again, by executive order—earlier this year, the Center for American Progress called on the White House to issue an order requiring every federal agency to help increase SNAP enrollment. This could come in the form of the IRS mailing SNAP applications to every household that’s eligible; having the Department of Health and Human Services promulgate outreach through the new health insurance exchanges; and the Department of Labor notifying people whose unemployment insurance is expiring that they are likely eligible for food stamps.
If full participation were achieved, SNAP could see a 33 percent increase in participation—a massive boost. Some people will naturally still decline to participate, due to perceived social stigma or other reasons, but surely there’s ground to be gained.
Greg Kaufmann explains what Congress and the media are missing in the food stamp debate.