What can Obama do on the economy without Congress?

The Capitol Reflecting Pool is frozen in front of the U.S. Capitol on Jan. 28, 2014 in Washington, DC.
The Capitol Reflecting Pool is frozen in front of the U.S. Capitol on Jan. 28, 2014 in Washington, DC.

If Congress won't act on jobs and the economy, President Obama promises that he will—a message he's expected to push in Tuesday's State of the Union. The problem is, there's not much the president can do on his own. 

Despite a brief detente over the budget, Congress remains paralyzed on almost everything else, big and small, that has the greatest potential to help the economy: tax reform, immigration reform, an infrastructure overhaul. To that end, "the president sees this as a year of action, to work with Congress where he can and to bypass Congress where necessary to lift folks who want to come up into the middle class," White House Press Secretary Jay Carney said Sunday on ABC's "This Week."

But the reality is there is very little that Obama can accomplish without Congress that would have a widespread economic impact. In his Tuesday address, Obama is expected to mention a White House pledge not to discriminate against the long-term unemployed, which major corporations like AT&T, Procter & Gamble, and Xerox have signed onto. It's a depressingly real problem: research has shown that employers are extremely reluctant to call back job applicants who've been out of the labor force for more than six months, no matter their industry, education, or work experience.

It's a far more modest initiative than the extension of federal unemployment aid that's now stalled in Congress, despite a vigorous White House lobbying effort. Advocates for the unemployed say they still welcome the move. "Anything we can do to keep up that moral pressure is really important--and pledges like these, from the country’s best and most powerful CEOs, boost up that moral pressure a lot," says Judy Conti of the National Employment Law Project. The hope is that such public measures will help shift cultural attitudes toward the long-time jobless, who are failing to benefit from the recovery. 

But there's nothing to ensure that corporations make good on their promises: Being jobless for a long time isn't a class protected against discrimination in federal law, and it's extremely unclear how widespread protections would ever be enforced. (Two state-level laws to protect the long-term jobless are quite limited in scope.) To that end, Conti says she'd hope to see the signatories take further action as well—"to hold job fairs specifically for the long-term unemployed, for example," she says.

And the business community itself isn't expecting much from Obama's speech. "I’m pretty skeptical that any executive action could have a meaningful effect on the macroeconomy," says Michael Feroli, chief economist for JPMorgan. As far as the market is concerned, the Federal Reserve's next move is far more significant.

Liberals are pushing for Obama to take other kinds of executive action that would have more teeth. He's already planning to make good on one of their demands: In Tuesday's speech, the president will announce his plan to raise the minimum wage for new federal contract workers from $7.25 to $10.10 through an executive order, benefitting janitors, food service workers, and others.

To improve working conditions, the administration could also tell federal procurement officers that they could add "job quality" to the factors they consider when determining which firms to award contracts, says former White House economist Jared Bernstein. "If two firms have a similar bid, but one provides them with a better work environment, they can choose them," Bernstein says.

A report from Demos estimates that the U.S. government funds nearly 2 million low-wage jobs in total, ranging from maintenance staff for public properties to home health-aides paid by Medicaid. The White House could take further action to improve their working conditions as well. But as with raising the minimum wage, such actions risk raising the cost of federally contracts as well.

Then there's always the presidential bully pulpit, which Brookings economist Justin Wolfers credits for helping raise the minimum wage issue to prominence, noting that a number of states have taken action since Obama highlighted it in his State of the Union address last year. Obama could focus this year on promoting early childhood education and paid sick and family leave, Wolfers said. "The broader thing is changing the climate in terms of state policymakers." And Obama could continue to lobby individuals from the private-sector to make incremental changes on their own, as he recently did with a group of college presidents on access to education.

But Obama's supporters and critics alike admit that his options are limited. "You can revisit some regulations, like he did with the employer mandate of the [Affordable Care Act]," says Doug Holtz-Eakin, president of the American Action Forum, referring to the administration's decision to delay the insurance requirement. "But there aren't many of those things left to do."