Growing from the middle out: the US economy in Obama’s second term

The US president needs to focus not just on employment per se but on creating good jobs.

The US economy has made a remarkable turnaround since 2008, moving from losing 800,000 jobs per month in the winter of 2009, to adding over 150,000 jobs per month over a two-year period. This shift from massive job losses to steady job gains occurred because of the decisive actions of policymakers who implemented a combination of monetary and fiscal policies in 2008 and 2009.

But while the economy has been in recovery since June 2009, the level of output continues to be significantly below potential, and as a result unemployment, especially long-term unemployment, remains unacceptably high. In his campaign, Obama made the case that the economy "grows from the middle out". Now, as president, he gets to work with Congress anew to realise that vision.

While the economics are fairly clear – and leading economists tend to be in broad agreement about this agenda – the politics are much more complex. The Democrats made significant victories in November’s election, keeping the presidency and increasing their seats in the Senate; however, the election also put Republicans in control of the US House of Representatives for the next two years.

It’s worth noting that while many of the policies implemented in response to the recession had a history of bipartisan support, Washington’s highly polarised political environment has meant that support for these efforts is now almost exclusively among Democrats. If he wants to see stronger improvements in the labour market, Obama will have to spend the next two years mitigating this gridlock and finding common ground.

Looking beyond the immediate problem of the fiscal cliff, Republican leaders in the House are unlikely to have any appetite for expansionary fiscal policy. Yet the president made the argument during the campaign that we ‘grow from the middle out’ – he now has to make this concept real, and lay out the specific policies that will accomplish this goal. He needs to focus not just on employment per se but on creating good jobs, with decent pay and benefits, and on the economic wellbeing of families, ensuring that every job is a good, pro-family job, and that families have the support they need.

Nearly half of all US workers do not have the right to take a sick day when they or a family member is ill, which creates enormous stress and anxiety for families. The typical US family paying for childcare spends about 13 per cent of their total family income on that care; families that need to pay for elderly care find that can be very expensive as well. Increasing funding for childcare and home health aids and other supports so that ageing Americans can live independently would not only help to support employment but would, in effect, boost the incomes of families who struggle to afford care. Similarly, focusing on policies that allow workers to balance work and family would show that the Obama administration truly understands what it means for families now that women are more typically than not also a family breadwinner.

While these issues are not currently at the top of the agenda, the president could begin to use the power of the bully pulpit to focus on increasing the net income of families, alongside policies to boost job creation and reduce unemployment, as this is the first step towards raising living standards more generally. These issues are ones that resonate especially strongly with women and Latino voters, although surveys show that the agenda around work and family resonates with conservative voters as well.

Another way to make real the idea of middle-out economics is to focus attention on America’s capacity to be a global leader in innovation and production. Over his first term, Obama put manufacturing and boosting exports at the top of his agenda, and the fact that he was unwilling to allow the US auto industry to die was a key component of his re-election campaign. Rebuilding US manufacturing should remain a key plank of our national investment strategy, and this includes making sure that any corporate tax reform follows the agenda that the president has already laid out, discouraging offshoring, encouraging domestic production, and stopping tax advantages for the use of debt over equity.

Critical to this strategy is tapping into the foundation laid by the American Recovery and Reinvestment Act in green technologies, such as through the production of components for solar and wind power generation as well as innovations in battery and other technologies. While there are certainly political hurdles, the president can make the compelling argument that these investments will improve US economic competitiveness and grow the economy over the long term, which resonates with the public. Furthermore, the administration could pursue a competitive dollar strategy, which would make US exports more affordable and would not necessarily require congressional action.

With President Obama winning a second term, he has a mandate to build on the successful policies of the first term. Putting the middle class at the core of what makes the economy grow, as he did during the campaign, would be a good place to start. Americans re-elected Obama because they believe he will do a better job bringing them a strong economy and – in no small part – because he recognises that a strong economy starts with them.

Heather Boushey is a visiting fellow at IPPR and senior economist at the Centre for American Progress in Washington DC. A longer version of this article appears in the latest edition of IPPR’s journal Juncture.

Barack Obama delivers a speech on the economy at the Daimler Detroit Diesel engine plant. Photograph: Getty Images.

Heather Boushey is a Visiting Fellow at IPPR and senior economist at the Centre for American Progress in Washington DC

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Interview: Momentum’s vice chair Jackie Walker on unity, antisemitism, and discipline in Labour

The leading pro-Corbyn campaigner sets out her plan for the party.

As Jeremy Corbyn’s supporters celebrate after his second win, Jackie Walker – vice chair of the pro-Corbyn campaign organisation Momentum, a Labour member and an activist – talks about the result and the next steps for Labour’s membership.

Walker is a controversial figure in the party. Her history as a black anti-racism activist and advocate for Palestine, and her Jewish background on both sides of her family, did not keep her from being accused of antisemitism for a February Facebook post about the African slave trade. In May, she was suspended from the Labour party for her comments, only to be reinstated a few weeks later after a meeting of Labour’s National Executive Committee.

Anger was reignited at an event hosted by Momentum that she spoke at during Labour party conference, on whether Labour has an antisemitism problem. Walker said the problem was “exaggerated” by Corbyn’s critics, and used as a “weapon of political mass destruction” by the media. (We spoke to Walker before this debate took place).

After a summer plagued by suspensions of Labour members, accusations of hateful speech on both sides, and calls for civility, Walker discusses what steps need to be taken forward to help bring the party together.

Jeremy Corbyn spoke in his acceptance speech about wiping the slate clean and the need to unite the party. What steps can members from all sides take to unite the party?

I think people have got to stop using antagonistic language with each other, and I think they’ve got to stop looking for ways to undermine the democratic will of the membership. That has now been plainly stated, and that’s even with something like 120,000 members not getting their vote because of the freeze. He has increased his majority – we all need to acknowledge that.

Is there anything that Corbyn’s supporters need to do – or need not to do – to contribute towards unity?

I can’t speak for the whole of Jeremy’s supporters, who are numbered in their hundreds and thousands; I know that in my Labour group, we are always bending over backwards to be friendly and to try and be positive in all of our meetings. So I think we just have to keep on being that – continue trying to win people over by and through our responses.

I was knocking doors for Labour last week in support of a local campaign protesting the planned closure of several doctors’ surgeries – I spoke to a voter on a door who said that they love the Labour party but felt unable to vote for us as long as Corbyn is leader. What should we say to voters like that?

The first thing I do is to ask them why they feel that way; most of the time, what I find is that they’ve been reading the press, which has been rabid about Jeremy Corbyn. In all the research that we and others have done, the British public agree overwhelmingly with the policies espoused by Jeremy Corbyn, so we’ve got to get on the doorstep and start talking about policies. I think that sometimes what happens in constituency Labour party groups is that people are saying “go out there and canvass but don’t mention Jeremy”. I think that we need to do the opposite – we need to go out there and talk about Jeremy and his policies all the time.

Now that Corbyn has a stronger mandate and we’ve had these two programmes on Momentum: Channel 4’s Dispatches and BBC’s Panorama, which were explanations of the group, Momentum’s role will be pivotal. How can Momentum contribute towards party unity and get its membership out on the doorstep?

I think we have to turn our base into an activist base that goes out there and starts campaigning – and doesn’t just campaign during elections but campaigns all the time, outside election time. We have to do the long campaign.

The Corbyn campaign put out a video that was subsequently withdrawn – it had been condemned by the pressure group the Campaign Against Antisemitism, which has filed a disciplinary complaint against him. What are your thoughts on the video?

I find their use of accusations of antisemitism reprehensible – I am an anti-racist campaigner and I think they debase the whole debate around anti-racism and I think they should be ashamed of themselves. There is nothing wrong with that video that anyone could look at it and say this is antisemitic. I would suggest that if people have doubt, they should look at the video and judge for themselves whether it is antisemitic.

There’s been a compliance process over the last several months that’s excluded people from the party for comments on social media. Now that Corbyn is in again, how should compliance change?

One of the issues is that we have gotten Jeremy back in as leader, but control of the NEC is still under question. Until the NEC actually accepts the recommendations of Chakrabati in terms of the workings of disciplinary procedures, then I think we’re going to be forever embroiled in these kinds of convoluted and strange disciplinary processes that no other political party would either have or put up with.

There have been rumours that Corbyn’s opponents will split from the party, or mount another leadership challenge. What do you think they’ll do?

I have absolutely no idea – there are so many permutations about how this game could now be played – and I say game because I think that there are some who are Jeremy’s opponents who kind of see it as a power game. I read a tweet somewhere saying that the purpose of this leadership election – which has damaged Labour hugely – has nothing to do with the idea that actually Owen Smith, his challenger, could have won, but is part of the process to actually undermine Jeremy. I think people like that should really think again about why they’re in the Labour party and what it is they’re doing.

Margaret Corvid is a writer, activist and professional dominatrix living in the south west.