Can Obama do anything about inequality without Congress?

Published / by Daniel Warr

The president is making it clear how he wants to spend this year and the next two — working on issues like inequality, mobility, wages and jobs. But Congress hasn’t been in a partnering mood the last five years, and there’s not much he can do by himself.

The administration has been able to make substantial headway toward its environmental and energy goals without going through Congress, such as stringent new fuel standards worked out with the 13 major auto companies. Obama also announced 23 executive actions to reduce gun violence after the Newtown shootings, and two more just this month.

His options are far more limited on economic and safety-net issues, a problem I explore in a piece today in The Daily Beast. It’s going to be a tough, uncertain slog, but as White House economic adviser Jason Furman put it, Obama does not intend to devote the rest of his presidency to simply making the Obamacare website “better and better and better and better until it’s just the best thing in the history of humanity.”  In his words: “There’s a lot of other things we want to do.”

Safety-net programs are hurting the poor, but not for the reasons you might think

Published / by Daniel Warr

Poverty-related stress causes an IQ loss greater than pulling an all-nighter, according to a book called Scarcity. Economist Sendhil Mullainathan of Harvard and psychologist Eldar Shafir of Princeton, the co-authors, say that goes a long way toward explaining why poor people have trouble making good decisions and plans for the future. They also say that’s good news — because it means the problem is situational, the stereotypes are wrong, and there are remedies.

Those remedies range from keeping it simple (one-stop-shops and direct payments) to first doing no harm (like, for instance, cutting off unemployment benefits to the long-term unemployed, with home losses and all the other hardships that will bring).

For all of you who have ever stayed up too late or all night, you know how you feel the next day. That is, not like tackling big challenges or sticking to disciplined master plans. Policymakers need to keep the scarcity effect in mind at all times as they consider safety-net programs.