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Lux: Dems Must Press Obama to Leverage His Power for Change

The following excerpt by Democratic strategist Mike Lux, author of The Progressive Revolution: How the Best in America Came to Be, is cross-posted from HuffPo:

Progressive organizations based in DC have historically focused most of their attention and political muscle on fighting legislative fights, getting Congress and the President to get new legislation passed or stop legislation they don't like from passing. That will of course need to be part of the progressive movement's agenda over the next two years, especially when it comes to fiscal policy and immigration reform, but with the House in the hands of far right Republicans and the Senate rarely able to move at all, I believe that with a few exceptions, much more of our attention needs to be focused on pushing the President to use the power he has to use executive action to improve the economy and fight for the middle class.

Case in point: there was an important article on the front page of the Washington Post on the 23rd, an article about how several of the leading economists in the country had advised the President in the first term that the biggest reason the economy hadn't recovered as well as hoped was the overhang of unsustainable housing debt on homeowners because of the collapse of the housing bubble. In a revealing sequence, the story describes how the President opened the meeting saying he wanted to hear their honest policy advice not bound by what they thought was politically feasible, that the gathered economic experts strongly encouraged him to do more to explore a far bigger mortgage debt forgiveness plan, and that Treasury Secretary Geithner immediately said nothing that ambitious was politically possible because you couldn't get a bill through Congress.

Although this particular meeting had not been reported before the WP piece on Friday, the recommendations by these top economists are hardly news: mortgage debt writedowns have been something that a wide range of economists from right to left have been pushing ever since the collapse of the bubble. The weakness of policy initiatives in this area is undoubtedly the biggest economic mistake the administration made in the first term. But there is a bigger problem that the story of this meeting highlights as well. Throughout Obama's first term, according to administration officials and those economic policy people who have met with the administration that I have talked with, a variety of administration officials led by Geithner have been consistent voices of saying why things can't get done when it comes to policies that would be tougher on Wall Street banks and/or spur the housing market's recovery (which, not coincidentally, would also cost the biggest banks a lot of money at least in the short term). Sometimes Geithner's excuse, as it was reported to be in the meeting with top economists, is that nothing can't get through Congress; sometimes it is just that the administration lacks the power to act for a wide variety of other reasons. Of course the first excuse doesn't explain why the administration did not lift a finger to help their closest Senate ally, Obama's mentor in the Senate Dick Durbin, pass the so-called "cramdown" bill, which would have made it far easier for judges to force banks to write down mortgage debt- the bill's failure prompting Durbin's famous complaint that "the banks own this place". And it doesn't explain Geithner and the administration's failure to support many of the strongest amendments on the Senate floor and in conference committee during the fight to pass financial reform. While it is true that there are plenty of things which will not pass Congress, when the administration had a legitimate shot at getting things done that would have helped the economy's banking and housing problems, the sad truth is that they just failed to do them too much of the time.

The second excuse is simply wrong, but unfortunately we are going to hear it a lot the next 4 years from conservative, pro-special interest Democrats in and out of the administration. The question in front of the President as he gets ready for his second term is whether he will be willing to ignore those voices and be willing to use the real powers of the executive branch to get things done to lift this economy and stand up to the wealthy special interests on Wall Street and elsewhere. Obviously, how Obama deals with Congress on the big budget issues, first and foremost being the fiscal showdown we are dealing with over the next month, is going to be crucial to how his second term plays out, but given Republican disinterest in dealing with most other policy issues (with the exception, hopefully, of immigration reform), President Obama is going to need to use the powers of the executive branch to get things done. If you look at history and the way Presidents from both parties as diverse as Lincoln, Teddy Roosevelt, Harry Truman, Nixon, Reagan, Bill Clinton, and George W. Bush have used those powers to get things done even with a balky and at times unfriendly Congress, it is clear that Obama can and should be moving forward aggressively on executive orders, regulatory action, and other methods to make things happen.

The first area on which the Obama administration needs to focus is bank accountability and that housing market issue I started this piece with, because despite modest improvements in the housing market in recent months. that mortgage debt problem is not going away. There's a lot that can be done in this arena, but the number one thing is to prioritize and focus the work of the Residential Mortgage Backed Securities Task Force. With the filings of recent lawsuits, the Task Force seems to be starting to gather some momentum, but there continues to be a lack of focus and resources coming from DOJ. Sources high inside the Task Force tell me they are "incredibly frustrated" with DOJ's continuing lack of attention and staff, and that it is not getting any better.

Why is this important for the economy overall? First, because when banks and bankers commit massive fraud and never get punished for it, they just keep doing it, endangering the broader economy and siphoning off money that would otherwise go to productive investment; and second, because legal action is sometimes the best (sometimes the only) way to force banks to the table around things like writing down more mortgage debt.

It's not just legal action that is important here either: the regulations being written right now under Dodd-Frank will go a long ways toward either helping or hurting our chances of getting back on the path to a strong economy. Conservatives will argue that by being too tough on the big banks with regulations you will stifle job creation, but in fact it is just the opposite. Regulations that keep the biggest banks from making risky trades and hoarding huge stashes of profits will mean more money will go into investment, more business start-ups will be launched, and more jobs will be created.

Here's another area that the Obama administration could choose to use executive power to lift the economy: lifting wages for low-income workers. How does one do this without having to go through Congress? Well, the federal government, including the military, is a huge sector of the economy, even above and beyond the 6,000,000 people plus employed by the military and civilian government agencies. Think about all the military uniforms, food for school lunch programs, computers, vehicles of all size and variety, office furniture, and so on they buy; think about all the contractors they hire for construction projects, food vending, shipping, military equipment, health insurance, pharmaceutical drugs, etc. There are no particular standards being enforced right now for most companies getting business from the federal government in terms of the wages they pay, the benefits they offer, or even that they have to avoid violating federal law in terms of their labor practices- that's right, the federal government regularly contracts with companies that have long histories of wage and hour violations.

If President Obama were to sign an executive order raising basic labor standards for companies the contract with or sell goods to the US government, and the average wage paid to the workers who were employed by federal government contractors and those who sold goods and services to the government were to go up by just a dollar or two an hour, the boost to the national economy in terms of the multiplier effect (what those workers would spend on buying new things) would be enormous.

These are just 2 examples. Through executive orders, through smart regulation, through the White House and regulators and DOJ just keeping the heat on companies in ways that promote economic growth, there is plenty that the executive branch can do to spur the economy without an act of Congress. Dan Froomkin wrote a terrific article mentioning several of the most important progressive ideas last year last November, and progressives should work hard to get these ideas enacted.

I just want to conclude by making this point. I am interested in politics because I want to win tangible improvements in low and middle income people's lives, and I suspect most progressives both in and out of government are in the same boat. My view is that we should look realistically at the political dynamic in front of us, and pick the most realistic path forward that makes those improvements. With Republicans controlling the House right now, on many issues, that path is not legislative fights but executive action. Progressive forces in this country should be doing everything in their power to mount campaigns to convince the President and his appointees to take action that will actually help people in the here and now. Spending all of our time, strategy, and resources on symbolic battles or positioning for the next election, and doing little to press Obama and his team to do what he can with executive power would be a huge mistake in my view. We need to make this a central strategic initiative of the next couple of years.