Congressional electionsare only weeks away. Predicting the outcome would be a fool’s errand for an economist, but not so for one key policy challenge President Obama will have to tackle during the lame-duck session of Congress. And that policy challenge? The congressional elections will enable President Obama to reaffirm his leadership on global economic issues at a time when international imbalances threaten the health of the US economy.
A comprehensive globalization agenda will have to include strengthening exports by building up manufacturing, comprehensive energy legislation, immigration policy, a comprehensive approach to building good jobs around the world, and fostering predictable exchange rates.
All this may sound daunting to tackle right after midterm elections, but here’s why the post-election period will require action and offers the president an opportunity to make some hard choices.
The elections will leave the Republican Party in disarray on key economic issues. The newly formed Republican caucus will have to figure out how to bring populists and business centrists together on issues ranging from job creation to fiscal policyand trade agreements. That will take time no matter the outcome of the elections.
Much of what needs to get done ontaxes, spending, and regulationwill require bipartisan compromises. Democrats, though, won’t be able to identify those compromises until they know what their Republican colleagues actually want. This will create an opening for President Obama to frame his vision for international economic policy.
This is an issue clearly in the purview of the president. Congress abdicated much of the responsibility for international economic policy decades ago to ensure policy continuity between presidential administrations.