Fred Block: How Obama Should Deal with a Republican House
[Fred Block’s new book, edited with Matthew Keller, is called State of Innovation: The U.S. Government’s Role in Technology Development, by Paradigm Publishers. It documents the economic importance of federal innovation spending.]
...The pundits have offered Obama two strategies to deal with the situation. The first is to follow Bill Clinton’s post-1994 trajectory—move sharply to the center and differentiate yourself from the liberal wing of the party. But this strategy does nothing to address the economic situation. Clinton’s strategy worked for him because there was a vigorous economic recovery underway that made him look good to centrist voters. A centrist Obama will not have that going for him in 2012.
The second is to follow the model of Truman in 1948: wage a determined battle for your preferred programs against the House Republicans, while fully expecting them to block the initiatives. He would then campaign in 2012 blaming the “do-nothing Congress” for the economy’s continuing weakness. While this is slightly better than the Clinton approach, it is also likely to fail. The Democrats tried in 2010 to blame unemployment on the Bush Administration and Republican obstruction, and that strategy did not save sixty House Democrats from defeat. Why should using the same rhetoric again—even if it is acted out through a series of dramatic confrontations—work in 2012?
Another strategy becomes clear when we understand the reason that recovery from the recession has been so slow. Private fixed investment is the key driver of the economy, and it fell dramatically as a percentage of GDP at the start of the recession and has not even begun to recover. The biggest fall has been in residential construction, which has declined by 4 percent of GDP since 2006. While we can expect that residential construction will recover somewhat from the current depressed levels, there is no way that it will bounce back to its unsustainable pre-recession peak. Other types of investment will have to take up the slack if we are to have vigorous job growth....
Read entire article at Dissent
...The pundits have offered Obama two strategies to deal with the situation. The first is to follow Bill Clinton’s post-1994 trajectory—move sharply to the center and differentiate yourself from the liberal wing of the party. But this strategy does nothing to address the economic situation. Clinton’s strategy worked for him because there was a vigorous economic recovery underway that made him look good to centrist voters. A centrist Obama will not have that going for him in 2012.
The second is to follow the model of Truman in 1948: wage a determined battle for your preferred programs against the House Republicans, while fully expecting them to block the initiatives. He would then campaign in 2012 blaming the “do-nothing Congress” for the economy’s continuing weakness. While this is slightly better than the Clinton approach, it is also likely to fail. The Democrats tried in 2010 to blame unemployment on the Bush Administration and Republican obstruction, and that strategy did not save sixty House Democrats from defeat. Why should using the same rhetoric again—even if it is acted out through a series of dramatic confrontations—work in 2012?
Another strategy becomes clear when we understand the reason that recovery from the recession has been so slow. Private fixed investment is the key driver of the economy, and it fell dramatically as a percentage of GDP at the start of the recession and has not even begun to recover. The biggest fall has been in residential construction, which has declined by 4 percent of GDP since 2006. While we can expect that residential construction will recover somewhat from the current depressed levels, there is no way that it will bounce back to its unsustainable pre-recession peak. Other types of investment will have to take up the slack if we are to have vigorous job growth....