The President, the Pen, the Phone, and the States

April 3rd, 2014 at 10:42 am

I’m often asked what President Obama can really accomplish on the economy with just “the pen and the phone,” i.e., what can he do without Congress.  It’s a tough question, because moving the needle on unemployment or implementing economic policies that reach lots of people requires Congressional cooperation, of which there ain’t hardly none these days.

So I typically talk about executive orders and rules, and maybe some diplomacy, like pressuring countries that manage their currency to get an export edge over us to stand down.  But that leaves out another potentially powerful venue: the states.

I thought this NYT piece made this point well, regarding the President’s push for a higher minimum wage:

The more President Obama talks about the need to raise the federal minimum wage, the less likely it appears that Republicans in Congress are inclined to do it.

But the stalemate matters less and less.  In the last 14 months, since Mr. Obama first called for the wage increase in his 2013 State of the Union address, seven states and the District of Columbia have raised their own minimum wages, and 34 states have begun legislative debates on the matter. Activists in an additional eight states are pursuing ballot referendums this year to demand an increase in wages for their lowest-paid workers.

The result is an outside-the-Beltway variation on Mr. Obama’s pledge to use his executive powers to bypass an obstructionist Republican Party in Congress.

This way of thinking about the problem considerably expands his reach, but there are clear constraints.  The minimum wage doesn’t have fiscal costs, so he’s not telling states how to spend their taxpayers’ money.  It’s harder to imagine an effective presidential nudge on public infrastructure investment, for example.

Here too, however, it’s good to see that some states are not standing still.  I’m always going on about Cleveland’s initiative to build out their port–see this Brookings listing of other cities undertaking infrastructure projects.

At the end of the day, there are lots of ways presidents can use their extremely unique bully pulpit.  It’s interesting and salutary to see President Obama adding the states to the pen and the phone.

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One comment in reply to "The President, the Pen, the Phone, and the States"

  1. Robert Buttons says:

    No need for central action on minimum wage. States and localities all over the country are setting MW as they see fit.

    Central planning of MW destroyed the economy of Samoa:
    (source: HuffPo)
    A report last year by the U.S. Government Accountability Office said employment in American Samoa has declined because of the minimum wage increases that began in 2007. The 142-page report said the decrease in employment was a result of losing a tuna cannery in American Samoa. Employers blamed the minimum wage increase for layoffs, work hour reductions and hiring freezes.