Five years after the Wall Street collapse, the plan President Obama laid out this week to try to revive a sluggish economy and build “ladders of opportunity” into the middle class has been received largely with yawns from economists and business groups, who argue that his small, targeted policy proposals aren’t substitutes for a broader vision of less spending and regulation and of fundamental tax reform.
To sell his initiatives — which include minimum wage increases and government-backed retirement accounts for workers — Mr. Obama hit the road on a four-state swing, where he is repeating his pledge to bypass Congress and embark on a landmark year of executive action.
But some political and economic analysts say the president’s proposals represent little in the way of new ideas and are more of an attempt to show Americans that his party is making progress as many of his fellow Democrats head into a high-stakes fall election fight.
“My feeling is that he threw out some ideas so he could point to some initiatives that he could take credit for. I don’t think it would have much of an impact. If it has an impact, I think it would be a negative impact,” said Steve Stanek, a research fellow at the conservative Heartland Institute who specializes in economic and financial issues. “He’s proposing largely what has been talked about for years already.”
Indeed, there was little new on the economic front in Mr. Obama’s State of the Union address Tuesday evening. One exception was the president’s announcement that he would hike the minimum wage from $7.25 to $10.10 an hour for all federal contractors and urged Congress to enact legislation doing the same for all American workers.
Mr. Obama pushed the idea during a visit Wednesday morning to Costco’s store in Lanham, Md., where he praised the retail chain for its average hourly wage of more than $20 and starting salary of more than $11 and argued that the company’s relatively high paychecks make for happier workers. He also thanked his “great friend” Costco founder Jim Sinegal, a major campaign donor.
“You can just tell people feel good about their job. They feel good about the company. You have a good atmosphere. The managers, the people all take pride in what you do,” Mr. Obama said after a tour of the store. “Now, folks who work at Costco understand that, but there are a lot of Americans who don’t work somewhere like Costco, and they’re working for wages that don’t go as far as they once did.”
His push to boost the minimum wage, however, has been met with derision by some business groups, many Republican lawmakers and others who argue that it would do little to jump-start the economy and could cost jobs in the long run.
“We welcome the president’s focus on the economy and jobs, but a minimum wage hike runs counter to that goal. Raising the minimum wage would place a new burden on employers at a time when national policy should be focused on removing barriers to job creation, not creating new regulations or mandates,” said Matthew Shay, president and CEO of the National Retail Federation.
Other business groups argue that the president would be better served to begin tackling the larger challenges facing the nation’s economy.
“We can’t afford to double down on the failed policies of tax, spend, regulate and mandate. That approach hasn’t worked for the last five years, and it won’t work now,” said U.S. Chamber of Commerce President and CEO Thomas J. Donohue, who added that the administration should address “reducing deficits and regulations, reforming tax and entitlements” and other, more ambitious goals.
Instead, with a gridlocked Congress, the White House seems content to move ahead with smaller moves it can make solely with executive power.
In addition to the minimum wage initiative, Mr. Obama on Wednesday took executive action to establish a system of retirement accounts. Dubbed “MyRas,” the interest-bearing accounts will be backed by the federal government and will allow workers whose employers don’t offer pensions or access to 401(k) plans the ability to begin saving for retirement.
The proposal, the president said, represents a core portion of his “opportunity agenda.”
“This is the opportunity agenda that is going to help restore some sense of economic security in this 21st-century economy,” he said during a speech at a suburban Pittsburgh steel mill. “These are real, practical, achievable solutions to help shift the odds back a little bit in favor of more working, middle-class Americans.”