Memo to the president: why being 'on the right track' isn't enough

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Dear Mr. President:

So far your election strategy can best be summed up as: "We're on the right track, my economic policies are working, we still have a long way to go, but stick with me and you'll be fine."


I'm afraid this won't be enough to win you the election. The recovery is too anemic, and the chance of an economic stall between now and Election Day far too high.

Even now, Mitt Romney's empty "I'll do it better" refrain is attracting as many voters as your "we're on the right track." Each of you is gathering 46 percent of voter support, according to the latest New York Times/CBS News poll.


Only 33 percent of the public thinks the economy is improving, while 39 percent say they're still falling behind financially -- an 11-point increase from 2008. Nearly two-thirds are concerned about paying for housing, and 23 percent of Americans with mortgages say they're underwater.

If the economy stalls, Mr. Romney's empty promise will look even better. And I'd put the odds of a stall at 50-50.

Europe's forced austerity is pushing the continent into recession. Meanwhile, China is slowing.

But the biggest worry is domestic demand here in the U.S. Because most Americans' real pay continues to drop, they're going deeper into debt and tapping into their savings. Inevitably, they'll have to cut their spending. Without sufficient government spending to make up the difference, total demand will shrink, causing employers to pare hiring. March's disappointing jobs report could mark the beginning.

This puts the odds of a Romney presidency far too high for comfort.

You have to go beyond "we're on the right track" and offer the nation a clear, bold strategy for boosting the economy. This would help inoculate you if the economy slows. It would also provide you with an economic mandate for your second term.

What might such a strategy entail? I'd advise you to focus on four items:

First, demand that the nation's banks modify mortgages of homeowners still struggling in the wake of Wall Street's housing bubble.


Threaten that if the banks fail to provide meaningful relief, in your second term you'll fight to resurrect the Glass-Steagall Act that used to separate investment from commercial banking, and you'll seek to break up Wall Street's biggest banks (as the Dallas Federal Reserve recently recommended).

Second, stop oil speculators from raising gas prices. Numerous studies show that speculation by U.S. index-fund traders has been raising gas prices by up to $1 a gallon. Wall Street and Big Oil are making a bundle, and oil-industry lawyers have gone to court to prevent the Commodity Futures Trading Commission from setting limits on such speculation.

Push the CFTC to set those limits, and instruct the Justice Department to investigate and prosecute oil-price manipulation.

Third, make it clear you won't allow government spending cuts to take precedence over job creation. You won't follow Europe into an austerity trap of slower growth and higher unemployment. While you understand the need to reduce the nation's long-term budget deficit, you'll veto spending cuts until unemployment is down to 5 percent.

Instead, you'll make further job-creating investments in the nation's crumbling infrastructure, and renew your call for an infrastructure bank.

Finally, make sure Americans understand the link between the fragile recovery and widening inequality. As long as so much of the nation's disposable income and wealth goes to the top, the vast middle class lacks the purchasing power to fire up the economy.


That's why the Buffett rule you've proposed -- setting a minimum tax rate for millionaires -- is just a first step toward ensuring that the gains from growth are more widely shared. Vow to do more your second term.

Such an economic strategy -- forcing banks to help distressed homeowners, stopping oil speculation, boosting spending until unemployment drops to 5 percent, and fighting to ensure economic gains are widely shared -- is critical to jobs and growth.

But to put it into effect, you need a Congress that's committed to better jobs and wages for all Americans. Remind voters that congressional Republicans prevented you from doing all that was needed in the first term, and they must not be allowed to do so again.

Robert B. Reich, Chancellor's Professor of Public Policy at the University of California and former U.S. Secretary of Labor, is the author of the newly released "Beyond Outrage: What has gone wrong with our economy and our democracy, and how to fix it," a Knopf e-book original.