Tonight, President Obama is expected to lay out new initiatives to help the sluggish economy and create jobs. Ahead of that speech, we’re taking a look at his economic record so far.
Of course, as the Obama administration has pointed out, the steepest job losses occurred in the early months of Obama’s tenure, before his economic policies—namely, the stimulus—took hold. Politifact rated that assertion true.
It’s also important to keep in mind that the president—and politicians generally—have limited control over economic growth. Though Obama and other contenders tout job numbers or GDP growth during their time in office, ultimately those indicators reflect more about the normal ups and downs of the business cycle than any one politician’s economic prowess.
So given that large, sweeping statistics aren’t the best gauge of how much credit (or criticism) to give to a politician, we’ve also run through the various programs Obama created to help the economy, looking at whether they worked and where you can find the best reading on them.
The centerpiece of Obama’s economic policy was the American Recovery and Reinvestment Act passed in February 2009. A mixture of tax cuts, safety net spending, and long-term investments in renewable energy and infrastructure, the federal stimulus package has been polarizing for politicians and economists. The Washington Post’s Wonkbook blog rounds up the major studies, with most—but not all—concluding the stimulus has indeed significantly helped the economy. The nonpartisan Congressional Budget Office has written a raft of reports saying the stimulus has paid off.
Last year, Time magazine highlighted the program’s successes and transformative down payments for clean energy, education reform and high-speed rail. But others have raised questions about whether those programs will live up to their hype. The Bay Citizen noted recently that “green jobs” have been few and far between. Facing budget cuts, many states have had to delay school reforms after winning the administration’s Race to the Top competition. And although California’s high-speed rail line is moving forward thanks to the stimulus, new estimates show the price tag could soar to more than $60 billion.
ProPublica has also tracked the stimulus since the beginning, and reported one of its main flaws – that much of the stimulus money, especially for infrastructure, wasn’t going where it was most needed.
Another good read on why it has been so difficult for Obama to do more on jobs is Peter Baker’s piece in The New York Times Magazine earlier this year. The story details the various challenges Obama has faced in Congress, with the business community and within his economic team to come up with new ideas that will attract support and actually work.
Yes, the bulk of the bailouts—including the bailout of the major banks—occurred under the Bush administration. But the Obama administration expanded on the auto bailout begun by Bush. And while the president and his administration have sought to sell the auto bailout as a success, it seems clear that—despite some misleading rhetoric—taxpayers won’t be recouping the loans in their entirety. U.S. officials have said they expect taxpayers to lose about $14 billion on the auto bailouts, the Wall Street Journal reported in June. (Check our page tracking the bailout as a whole.)
The Obama administration considers that figure to be a minimal amount against estimates that 1 million jobs would have been lost without the rescue. While it’s hard to predict whether the U.S. auto industry would have actually collapsed without the bailout, the industry has survived, created jobs since the bailout, repaid some loans early, and is expected to repay back the bulk of the funds borrowed.
Help for homeowners
As we reported earlier this year, President Obama never fulfilled an important campaign promise to help homeowners by changing bankruptcy laws: “I will change our bankruptcy laws to make it easier for families to stay in their homes,” he said in September 2008. That never happened.
The Obama administration’s central effort to help struggling homeowners—the Home Affordable Modification Program—has also fallen drastically short of its goals to help 3 to 4 million homeowners avoid foreclosure. The voluntary program gives mortgage servicers and banks incentive payments for helping homeowners but imposes no penalties if they don’t.
Ultimately, the servicers offered permanent mortgage modifications to only a fraction of homeowners in need of them. Most of the roughly $30 billion in funds for the program—as well as another $7 billion in funding for states to help fund foreclosure prevention programs—have been left unspent.
The Obama administration has also recently pressed for a quick settlement to a nationwide investigation into the shoddy mortgage operations at banks. The administration’s push for a settlement is opposed by consumer advocates and some state officials, who have balked at an early settlement for fear that the banks will be let off the hook for their abuses.
As the New York Times has noted, even before the economic meltdown in 2008, Barack Obama expressed concerns about gaps in regulation that left the financial system vulnerable. But the signature financial overhaul he championed and signed last year—the Dodd-Frank financial reform bill—waited until after the health care overhaul and, as we’ve noted, may ultimately fall short of the sweeping reform that it promised.
Of course, the fate of Dodd-Frank, however it turns out, can’t all be placed on the president. The bill in its early form was watered down in some key areas during congressional negotiations, and the financial sector has continually lobbied to weaken the final rules even as regulators have fallen behind in writing them.
Other unfulfilled pledges
As a candidate, Barack Obama promised to let the Bush tax cuts expire for the wealthiest Americans—that is, households making more than $250,000 a year and individuals making more than $200,000. As a 2008 piece for the New York Times magazine described it, “To a large extent, Obama’s own economic agenda revolves around reversing Bush’s tax policies.”
That didn’t work out. In December 2010, just as the Bush tax cuts were set to expire, Obama backed down in the face of Republican demands and extended the tax cuts for all Americans, including the wealthiest. He’s since renewed his promise to let the cuts for the richest expire the next time around, at the end of this year: “I refuse to renew them again,” he said in April.
In 2008, Obama told also told the Times writer David Leonhardt that the deficit was only one of the country’s long-term problems, and that while he admired Clinton’s economic policies, “I probably wouldn’t have been as obsessed with deficit reduction.”
As Leonhardt noted this summer, Obama’s stance shifted and he turned his focus on the deficit, in part of course because Republicans threatened to refuse to lift the nation’s debt ceiling unless deficit reduction was part of the deal.