Things The Administration Can Do

Kevin Drum wants to know what measures people think President Obama could take to boost the economy that don’t require congressional authorization.

I’m going to wink in the direction of appointing people to the Federal Reserve Board of Governors since I think the proposition that Congress is blocking everyone here has yet to be tested. In his term, Obama has made four Fed nominations (Bernanke, Yellen, Raskin, and Diamond) and three of them have been confirmed. Richard Shelby’s blocking of Peter Diamond’s nomination was ridiculous, but seems in part to have had a personal rather than ideological motivation. There are currently two vacancies.

The other big possibilities for action here seem to me to be on housing finance and on currency policy. When Minority Leader Nancy Pelosi had progressive media types in last week, she was very optimistic about the job creating possibilities of a crackdown on Chinese currency manipulation. Too optimistic, I think, since a lot of these issues have deeper roots that won’t turn on a dime simply if currency markets fluctuate. Still, at this juncture, we’ve come to a point where I don’t see the utility in the Treasury Department failing to make an official ruling that China is a currency manipulator and threatening retaliation unless China allows for more rapid RMB appreciation. Meanwhile, Fannie Mae and Freddie Mac are now official wards of the U.S. government and still play a very important role in the housing finance system. They could be used as tools to refinance or restructure a large number of outstanding mortgages in a way that will hasten the deleveraging process. I understand that there would be a perceived fairness problem with doing this. But on the substance, a lot of “unfair” things have already been done (TARP, blah) so why not one more, this time with a more working class target? On the politics, more robust economic growth will matter more to people than qualms about the details.